Econ Final 14
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The functions of money are to serve as a:
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Unit of account, store of value, and medium of exchange
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When a consumer wants to compare the price of one product with another, money is primarily functioning as a:
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Unit of account
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When a banker records how many dollars each of his borrowers owes the bank, money is serving as a:
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Unit of account
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What function is money serving when you deposit money in a savings account?
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A store of value
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What function is money serving when you use it when you go shopping?
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A medium of exchange
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If product prices were stated in terms of tobacco leaves, then tobacco leaves would be functioning primarily as:
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A unit of account
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One major advantage of money serving as a medium of exchange is that it allows society to:
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Escape the complications of barter
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Money eliminates the need for a coincidence of wants in trading primarily through its role as a:
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Medium of exchange
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An asset's liquidity refers to its ability to be:
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A means of payment
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Currency and checkable deposits are:
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The major components of money supply M1
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The paper currencies of the U.S. are also called:
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Federal Reserve notes
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The M1 money supply is composed of:
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Checkable deposits and currency in circulation
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Which definition(s) of the money supply include(s) only items which are directly and immediately usable as a medium of exchange?
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M1
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Checkable deposits are included in:
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both M1 and M2
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People can generally get the following items at their commercial banks, except:
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Money market mutual funds
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Which of the following "backs" the value of money in the United States?
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The acceptability of it as a medium of exchange
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United States currency has value primarily because it:
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Is relatively scarce, is legal tender, and is generally acceptable in exchange for goods and services
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The Federal backing for money in the United States comes from:
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Controlling the money supply in order to keep the value of money relatively stable over time
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What "backs" the money supply of the U.S.?
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The U.S. government's ability to keep the value of money relatively stable
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When paper money is designated as legal tender, it means that:
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It is a means of payment by law
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When there is inflation in the economy, it implies that the:
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Price index is rising and the purchasing power of money is falling
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To keep high inflation from eroding the value of money, monetary authorities in the United States:
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Control the supply of money in the economy
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The Federal Reserve Banks are owned by the:
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Member banks
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The Federal Reserve System consists of which of the following?
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Board of Governors and the 12 Federal Reserve Banks
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How many members can serve on the Board of Governors of the Federal Reserve System?
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7
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How long is the term of office for members appointed to serve on the Board of Governors of the Federal Reserve System?
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14 years
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When was the Federal Reserve System established?
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1913
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The Federal Reserve System of the U.S. is the country's:
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Central bank
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Members of the Federal Reserve Board of Governors are:
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Appointed by the President to staggered 14-year terms
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Which group assists the Board of Governors of the Federal Reserve System in determining monetary policy?
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Federal Open Market Committee
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The Federal Open Market Committee (FOMC):
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Sets policy on the sale and purchase of government bonds by the Fed
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The Federal Open Market Committee (FOMC) of the Federal Reserve System is primarily for:
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Setting the Fed's monetary policy and directing the purchase and sale of government securities
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The twelve Federal Reserve Banks can best be characterized as:
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Central banks, banker's banks, and quasi-public banks
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The most important of the Federal Reserve district banks is the:
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New York bank
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How many Federal Reserve Banks are there?
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12
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The Federal Reserve System is divided into:
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12 districts
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Holding the money deposits of businesses and households and making loans to the public are the basic functions of:
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Commercial banks and thrift institutions
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Which of the following is the most important function of the Federal Reserve System?
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Controlling the money supply
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The Federal Reserve System is an:
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Independent agency of government
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The Financial Crisis of 2007-2008 started in which sector of the economy?
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Real estate and housing sector
