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| 1 | |
Which of the following principles requires money to be easily moved from one location to another for it to function as a medium of exchange? |
| | A) | Durability |
| | B) | Divisibility |
| | C) | Fixed value |
| | D) | Stability |
| | E) | Portability |
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| 2 | |
Steps taken to prevent money from being produced illegally are an attempt to make it _____. |
| | A) | more measurable |
| | B) | more portable |
| | C) | less divisible |
| | D) | durable |
| | E) | difficult to counterfeit |
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| 3 | |
A _____ refers to money stored in an account at a bank or other financial institutions that can be withdrawn without advance notice, and does not have much restriction. |
| | A) | checking account |
| | B) | savings account |
| | C) | time deposit |
| | D) | money market account |
| | E) | certificate of deposit (CD) |
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| 4 | |
Which of the following is true of savings accounts? |
| | A) | They are also called as demand deposits. |
| | B) | The funds can be withdrawn without advance notice. |
| | C) | They usually do not have any limit on the number of withdrawals per period. |
| | D) | They are generally used as a medium of exchange. |
| | E) | Their funds can be turned into cash. |
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| 5 | |
Which of the following is true of a debit card? |
| | A) | It allows credit purchase. |
| | B) | It offers purchase grace period. |
| | C) | It provides hard paper trail. |
| | D) | It decreases teller transactions. |
| | E) | It allows you to pay at a later date. |
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| 6 | |
If the Fed wants to increase the money supply, it is likely to: |
| | A) | buy government securities. |
| | B) | raise discount rates. |
| | C) | increase reserve requirements. |
| | D) | sell government securities. |
| | E) | restrict credit controls. |
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| 7 | |
The Fed's _____ determine(s) whether nonbanking activities, such as brokerage services, leasing, and insurance, are appropriate for banks. |
| | A) | monetary policy |
| | B) | regulatory function |
| | C) | check clearing function |
| | D) | depositary insurance policy |
| | E) | open market operations |
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| 8 | |
Which of the following is true of commercial banks? |
| | A) | They are the most recent form of financial institutions to be formed. |
| | B) | They do not rely on savings accounts for funds. |
| | C) | They use almost all the funds to make loans to businesses. |
| | D) | They do not make loans to individuals. |
| | E) | They use checking accounts as one of the primary sources of funds. |
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| 9 | |
By investing in _____, individuals invest in multiple securities, thereby minimizing the risks of any single security that does not do well. |
| | A) | checking accounts |
| | B) | pension funds |
| | C) | mutual funds |
| | D) | insurance companies |
| | E) | brokerage firms |
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| 10 | |
Which of the following was an action taken by the Fed to help recover the economy from the financial crisis that occurred in 2007-2008? |
| | A) | It ensured that the markets in commercial paper and other securities, that were not functioning properly, ceased to function. |
| | B) | Unlike before, it refrained from managing the long- and short-term rates to generate a large spread between borrowing and lending rates. |
| | C) | The Fed took measures to raise the interest rates to control economic activity. |
| | D) | It began to pay interest on reserves banks kept at the Fed. |
| | E) | It refrained from lending money at the discount window. |
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