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.   bank regulators levy fines according to the number of excess reserves outstanding.
B.   they wish to maximize profits by making as many loans as possible.
C.   the Fed charges a penalty for holdings of excess reserves.
D.   they are concerned that the money multiplier will become too large.
Question #2
Which of the following is not a major problem with some commodity monies?
A.   To be useful, money must be indivisible.
B.   To be useful, money must be storable and durable.
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.   silver in government vaults.
B.   Federal Reserve notes in banks.
C.   willingness to accept it as payment.
D.   gold in Ft. Knox.
Question #4
Money is an imperfect store of value when
A.   the rate of inflation is very high.
B.   the unemployment rate is high.
C.   banks are failing at an abnormally high rate.
D.   gold can be purchased at bargain prices.
Question #5
The FDIC
A.   all of these
B.   eliminates the motive for customers to rush to their bank just because they heard bad news about the bank's finances.
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.   bank runs.
B.   risky lending.
C.   All of these are correct.
D.   excess 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.   efficiency in arranging transactions
B.   time necessary to find trading partners
C.   ability to record transactions.
D.   time devoted to shopping
Question #9
The government banking regulation that places an upper limit on the money supply is
A.   limitations on the types of assets that a bank may own.
B.   reserve requirements on bank deposits.
C.   periodic bank examinations and audits.
D.   deposit insurance by the FDIC.

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