Econ 102 - Principles of Macroeconomics » Fall 2022 » Money and Banking Quiz

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Question #1
Currently in the U.S., money is backed by
A.   gold in Ft. Knox.
B.   willingness to accept it as payment.
C.   silver in government vaults.
D.   Federal Reserve notes in banks.
Question #2
The major contribution of the "goldsmith's principle" to modern banking is
A.   universal standards for the purity and weight of gold coins.
B.   fractional reserve banking
C.   paper money that is fully backed by gold.
D.   neighborhood banking.
Question #3
The FDIC
A.   eliminates the motive for customers to rush to their bank just because they heard bad news about the bank's finances.
B.   insures most bank deposits for up to $250,000.
C.   has been credited with the pronounced decline in bank failures after 1933, when the FDIC was established.
D.   all of these
Question #4
Money almost always is used to quote prices. This illustrates the function of money as a
A.   unit of account
B.   store of value
C.   medium of exchange
D.   commodity value
Question #5
The fractional reserve system of banking evolved because
A.   goldsmiths knew that on any given day, only a few depositors would come to claim their deposits.
B.   goldsmiths did not have safes large enough to hold all of their gold deposits.
C.   goldsmiths knew that they would not be prosecuted for lending out money that they did not have.
D.   their was always a dire need for additional money.
Question #6
The government banking regulation that places an upper limit on the money supply is
A.   deposit insurance by the FDIC.
B.   reserve requirements on bank deposits.
C.   limitations on the types of assets that a bank may own.
D.   periodic bank examinations and audits.
Question #7
If Depositors become worried about the safety of their deposit accounts, they may trigger a
A.   deposit surplus.
B.   required reserve increase.
C.   fiscal policy crisis.
D.   bank run.
Question #8
Money is an imperfect store of value when
A.   banks are failing at an abnormally high rate.
B.   the unemployment rate is high.
C.   the rate of inflation is very high.
D.   gold can be purchased at bargain prices.
Question #9
Which of the following is not a major problem with some commodity monies?
A.   To be useful, money must be easily handled.
B.   To be useful, money must be indivisible.
C.   To be useful, money must be storable and durable.
D.   To be useful, money must be of uniform quality.

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