A.   legal tender

B.   a medium of exchange

C.   fiat money

D.   token money

A.   No, because they provide a short-term loan to cardholders from a financial institution that issued the card.

B.   Yes, because their value is included in the calculation of M 2.

C.   No, because the card transactions are not insured by either the Federal Reserve banks or the U.S. Treasury.

D.   Yes, because their value is included in the calculation of M 1.

A.   the gold bullion that is stored in Fort Knox, Kentucky

B.   the willingness of banks and the government to surrender something of value in exchange for money

C.   the belief of holders of money that it can be exchanged for desirable goods and services

D.   the confidence of the public in the ability of government to pay off the national debt

A.   debts, or promises to pay

B.   legal tender

C.   token money

D.   assets of the Federal Reserve Banks

A.   20%

B.   16.67%

C.   14.14%

D.   25%

A.   increase the use of money as a measure of value

B.   decrease the use of money as a medium of exchange

C.   increase the purchasing power of money

D.   decrease the conversion of money to gold

A.   uses price and wage controls

B.   employs fiscal policy

C.   controls the money supply

D.   buys corporate stock

A.   privately owned and controlled

B.   publicly owned but privately controlled

C.   publicly owned and controlled

D.   privately owned but publicly controlled

A.   the public as do commercial banks and thrifts

B.   federal government as does the U.S. Treasury

C.   commercial banks and thrifts as does the Federal Deposit Insurance Corporation

D.   commercial banks and thrifts as those institutions do for the public

A.   supervising the operation of banks to make sure they follow regulations and monitoring banks so they do not engage in fraud

B.   acting as the fiscal agent for the federal government and issuing currency

C.   setting the Fed's monetary policy and directing the buying and selling of government securities

D.   handling the Fed's collection of checks and adjusting legal reserves among banks

A.   overestimating the expected profits made by oil companies

B.   underestimating the risk of losses on mortgage-backed securities

C.   understating the benefits of devaluing the U.S. dollar

D.   overstating the moral hazard problem

A.   set up the money market investor funding facility (MMIFF)

B.   set up the commercial paper funding facility (CPFF)

C.   set up the Troubled Asset Relief Program (TARP)

D.   set up the primary dealer credit facility (PDCF)

A.   using deposited gold to produce products for sale to others

B.   issuing paper money in excess of the amount of gold stored with them

C.   accepting deposits of gold for safe storage

D.   issuing receipts for the gold stored with them

A.   provide the Fed with a means of controlling the lending ability of the commercial bank

B.   provide the means by which checks drawn on the commercial bank and deposited in other commercial banks can be collected

C.   add to the liquidity of the commercial bank and protect it against a "run" on the bank

D.   protect the deposits in the commercial bank against losses

A.   Internal Revenue Service

B.   Congress of the United States

C.   U.S. Treasury

D.   Federal Reserve

A.   Bond prices and the interest rate are directly related.

B.   A lower interest rate raises the opportunity cost of holding money.

C.   The total demand for money is inversely related to the interest rate.

D.   The supply of money is directly related to the interest rate.

A.   the discount rate

B.   interest on reserves

C.   the reserve ratio

D.   open-market operations

A.   increases the discount rate

B.   changes required reserves to excess reserves

C.   increases the amount of excess reserves banks must keep

D.   decreases the discount rate

A.   the Federal Reserve charges for short-term loans to commercial banks

B.   banks charge for overnight use of excess reserves held at the Federal Reserve banks

C.   is charged for government bonds sold in the open market operations of the Federal Reserve

D.   banks charge for loans to the most creditworthy customers

A.   a discretionary fiscal policy

B.   a restrictive monetary policy

C.   an expansionary monetary policy

D.   a prime interest rate policy

A.   selling government securities and lowering the discount rate

B.   buying government securities and lowering the discount rate

C.   selling government securities and raising the discount rate

D.   buying government securities and lowering the reserve ratio

A.   government spending

B.   investment spending

C.   the imports of the economy

D.   tax rates

A.   a decrease in the federal funds rate and a decrease in the money supply

B.   an increase in the federal funds rate and a decrease in the money supply

C.   a decrease in the federal funds rate and an increase in the money supply

D.   an increase in the federal funds rate and an increase in the money supply

A.   Jerome Powell

B.   Ben Bernanke

C.   Janet Yellen

D.   Alan Greenspan