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 wish to maximize profits by making as many loans as possible.
B.   the Fed charges a penalty for holdings of excess reserves.
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 storable and durable.
B.   To be useful, money must be indivisible.
C.   To be useful, money must be of uniform quality.
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.   silver in government vaults.
C.   gold in Ft. Knox.
D.   willingness to accept it as payment.
Question #4
Money is an imperfect store of value when
A.   the rate of inflation is very high.
B.   gold can be purchased at bargain prices.
C.   banks are failing at an abnormally high rate.
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.   has been credited with the pronounced decline in bank failures after 1933, when the FDIC was established.
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.   excess lending.
B.   bank runs.
C.   risky lending.
D.   All of these are correct.
Question #7
Which of the following is most liquid?
A.   checking accounts
B.   savings accounts
C.   cash
D.   savings bonds
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.   ability to record transactions.
C.   time necessary to find trading partners
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.   limitations on the types of assets that a bank may own.
C.   periodic bank examinations and audits.
D.   reserve requirements on bank deposits.

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