Econ 102 - Principles of Macroeconomics » Spring 2023 » Money and Banking Quiz

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Question #1
Banks try to keep their level of excess reserves low because
A.   the Fed charges a penalty for holdings of excess reserves.
B.   they wish to maximize profits by making as many loans as possible.
C.   they are concerned that the money multiplier will become too large.
D.   bank regulators levy fines according to the number of excess reserves outstanding.
Question #2
Which of the following is not a major problem with some commodity monies?
A.   To be useful, money must be of uniform quality.
B.   To be useful, money must be storable and durable.
C.   To be useful, money must be indivisible.
D.   To be useful, money must be easily handled.
Question #3
Currently in the U.S., money is backed by
A.   Federal Reserve notes in banks.
B.   gold in Ft. Knox.
C.   willingness to accept it as payment.
D.   silver in government vaults.
Question #4
Money is an imperfect store of value when
A.   the unemployment rate is high.
B.   the rate of inflation is very high.
C.   banks are failing at an abnormally high rate.
D.   gold can be purchased at bargain prices.
Question #5
The FDIC
A.   insures most bank deposits for up to $250,000.
B.   all of these
C.   eliminates the motive for customers to rush to their bank just because they heard bad news about the bank's finances.
D.   has been credited with the pronounced decline in bank failures after 1933, when the FDIC was established.
Question #6
One intention of deposit insurance is to reduce the danger of
A.   excess lending.
B.   bank runs.
C.   All of these are correct.
D.   risky lending.
Question #7
Which of the following is most liquid?
A.   checking accounts
B.   cash
C.   savings bonds
D.   savings accounts
Question #8
The primary benefit of a monetary system of exchange compared to a barter system is the increased
A.   time devoted to shopping
B.   time necessary to find trading partners
C.   ability to record transactions.
D.   efficiency in arranging transactions
Question #9
The government banking regulation that places an upper limit on the money supply is
A.   deposit insurance by the FDIC.
B.   periodic bank examinations and audits.
C.   limitations on the types of assets that a bank may own.
D.   reserve requirements on bank deposits.

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