Economics Today and Tomorrow

Chapter 14: Money and Banking

Money and Banking

1
Money is defined as anything that is customarily used as __________
A)a medium of exchange, a unit of accounting, and a store of value.
B)a medium of exchange and a unit of accounting.
C)a unit of accounting and a store of value.
D)a medium of exchange and a store of value.
2
Which of the following is NOT a characteristic of a good medium of exchange?
A)It must be portable.
B)It must be divisible.
C)It must be in abundant supply.
D)It must be stable in value.
3
The passage of the Coinage Act in 1792 brought order to the monetary system of the United States by __________
A)establishing the dollar as the basic unit of currency.
B)chartering the First Bank of the United States.
C)creating the Comptroller of the Currency position.
D)issuing fiat money called greenbacks.
4
The Federal Reserve System was established to __________
A)create a gold standard.
B)control the amount of money in circulation.
C)ensure a safe, uniform currency.
D)insure the funds of individual depositors.
5
Today, banks and savings institutions offer all of the following services EXCEPT __________
A)checking accounts.
B)interest on checking accounts.
C)storage of valuables.
D)exchanging dollars for gold or silver.
6
All of the following are drawbacks for customers using electronic funds transfer EXCEPT __________
A)the increased risks of tampering.
B)the increased lack of privacy.
C)the reduced time, trouble, and costs.
D)the possibility of altering account files.
7
One way in which money and near moneys are alike is that __________
A)their values are stated in the same terms.
B)they are able to be withdrawn immediately.
C)they have low liquidity.
D)they include assets that require a bank to be notified in advance of withdrawal.
8
The M2 definition of money includes __________
A)currency, traveler's checks, and checkable deposits.
B)near moneys such as money market mutual fund balances and Eurodollars.
C)currency, traveler's checks, checkable deposits, and near moneys such as money market mutual fund balances and Eurodollars.
D)currency only.
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