4.03 Money in the Bank – Flashcards
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Which best explains how a barter system works?
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Goods and services are exchanged without the use of money.
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Which is a form of fiat money that is commonly used today?
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digital money
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Which most accurately explains why commodity money has value?
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Commodity money is a good that can be used as a medium of exchange or for some other purpose.
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Which is a balance sheet?
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statement of financial position
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Which of the following explains why the government sets a required reserve ratio for private banks?
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make sure banks don't run out of money when customers make withdrawals
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Which of the following best describes how the Federal Reserve Bank helps banks during a bank run?
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can provide a short-term loan to banks to prevent them from running out of money
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Which of the following best describes monetary policy?
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managing the economy by controlling the money supply
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Which of the following best explains why raising the required reserve ratio results in a decrease in the money supply?
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Banks must loan out a smaller portion of their reserves, resulting in fewer loans.
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Which of the following best explains why Treasury bonds have an effect on the size of the money supply?
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The Federal Reserve Bank can buy and sell these bonds to raise or lower bank deposits.
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Which action is most likely to result in a decrease in the money supply?
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The government sells a new batch of Treasury bonds.
