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.   they wish to maximize profits by making as many loans as possible.
C.   bank regulators levy fines according to the number of excess reserves outstanding.
D.   the Fed charges a penalty for holdings of excess reserves.
Question #2
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 of uniform quality.
C.   To be useful, money must be storable and durable.
D.   To be useful, money must be indivisible.
Question #3
Currently in the U.S., money is backed by
A.   silver in government vaults.
B.   gold in Ft. Knox.
C.   willingness to accept it as payment.
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 rate of inflation is very high.
C.   gold can be purchased at bargain prices.
D.   the unemployment rate is high.
Question #5
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.   all of these
C.   has been credited with the pronounced decline in bank failures after 1933, when the FDIC was established.
D.   insures most bank deposits for up to $250,000.
Question #6
One intention of deposit insurance is to reduce the danger of
A.   All of these are correct.
B.   bank runs.
C.   risky lending.
D.   excess lending.
Question #7
Which of the following is most liquid?
A.   cash
B.   savings accounts
C.   checking accounts
D.   savings bonds
Question #8
The primary benefit of a monetary system of exchange compared to a barter system is the increased
A.   efficiency in arranging transactions
B.   time devoted to shopping
C.   time necessary to find trading partners
D.   ability to record 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.   reserve requirements on bank deposits.
D.   limitations on the types of assets that a bank may own.

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