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

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