Question 1

A bank holding company is

Accepted Answer

A) a conglomerate that owns a bank to service the other businesses it owns 
B) a loose federation of private banks that hold assets in common 
C) a corporation that owns one or more banks 
D) a bank that is owned by the depositors 
E) a subsidiary of a major corporation 
A) a conglomerate that owns a bank to service the other businesses it owns 
B) a loose federation of private banks that hold assets in common 
C) a corporation that owns one or more banks 
D) a bank that is owned by the depositors 
E) a subsidiary of a major corporation C

Question 2

When the Federal Reserve System was established,

Accepted Answer

A) all banks were required to become members 
B) only federally chartered banks were allowed to join 
C) only federally chartered banks were required to join 
D) most banks joined even though none were required to join 
E) membership was required for all banks in some states, but not in others 
A) all banks were required to become members 
B) only federally chartered banks were allowed to join 
C) only federally chartered banks were required to join 
D) most banks joined even though none were required to join 
E) membership was required for all banks in some states, but not in others C

Question 3

The more specialized labor is,

Accepted Answer

A) the less likely it is that a double coincidence of wants will exist, and the less likely it is that monetary exchange will develop 
B) the less likely it is that a double coincidence of wants will exist, and the more likely it is that monetary exchange will develop 
C) the more likely it is that a double coincidence of wants will exist, and the less likely it is that monetary exchange will develop 
D) the more likely it is that a double coincidence of wants will exist, and the more likely it is that monetary exchange will develop 
E) the more likely it is that individuals are producing only what they want to consume 
A) the less likely it is that a double coincidence of wants will exist, and the less likely it is that monetary exchange will develop 
B) the less likely it is that a double coincidence of wants will exist, and the more likely it is that monetary exchange will develop 
C) the more likely it is that a double coincidence of wants will exist, and the less likely it is that monetary exchange will develop 
D) the more likely it is that a double coincidence of wants will exist, and the more likely it is that monetary exchange will develop 
E) the more likely it is that individuals are producing only what they want to consume B

Question 4

U.S. banks have grown primarily through

Accepted Answer

A) America's longstanding preference for big banks 
B) surviving banks buying up bankrupt banks 
C) excellent customer service 
D) mergers and acquisitions 
E) All of the answers are correct 
A) America's longstanding preference for big banks 
B) surviving banks buying up bankrupt banks 
C) excellent customer service 
D) mergers and acquisitions 
E) All of the answers are correct

Question 5

All of the following are reasons that cigarettes came to serve as money in WWII prisoner of war camps except one. Which is the exception?

Accepted Answer

A) cigarettes are of uniform quality 
B) cigaretttes were in limited supply 
C) cigarettes are reasonably durable 
D) cigarettes could not be counterfeited 
E) cigarettes could individually support small transactions and in packs they could support large transactions 
A) cigarettes are of uniform quality 
B) cigaretttes were in limited supply 
C) cigarettes are reasonably durable 
D) cigarettes could not be counterfeited 
E) cigarettes could individually support small transactions and in packs they could support large transactions

Question 6

Bank holding companies

Accepted Answer

A) b, c, and d are correct 
B) can often engage in interstate banking 
C) can provide financial advisory services 
D) have access to more sources of funds than individual commercial banks 
E) are subject to the same regulations as commercial banks 
A) b, c, and d are correct 
B) can often engage in interstate banking 
C) can provide financial advisory services 
D) have access to more sources of funds than individual commercial banks 
E) are subject to the same regulations as commercial banks

Question 7

Gresham's Law states that when different forms of commodity money circulate simultaneously (e.g., $1 gold coins and $1 silver coins),

Accepted Answer

A) the one with the more intrinsic ("commodity") value will disappear from circulation 
B) the one with the lesser intrinsic ("commodity") value will disappear from circulation 
C) both will eventually have to be withdrawn from circulation by the government 
D) the resultant disruption in the money markets will cause inflation 
E) the resultant disruption in the money markets will cause a recession 
A) the one with the more intrinsic ("commodity") value will disappear from circulation 
B) the one with the lesser intrinsic ("commodity") value will disappear from circulation 
C) both will eventually have to be withdrawn from circulation by the government 
D) the resultant disruption in the money markets will cause inflation 
E) the resultant disruption in the money markets will cause a recession

Question 8

Eileen puts $10,000 in a federally insured checking account at the First National Bank. Norma borrows $10,000 from the First National Bank, flies to a South Pacific island, and is never heard from again. Which of the following is true?

Accepted Answer

A) Eileen will lose her $10,000. 
B) Eileen will lose her $10,000 if she and Norma are related. 
C) Eileen will lose her $10,000 if the First National Bank makes all of its loans to people who run off to South Pacific islands. 
D) Eileen will not lose her $10,000 no matter what happens to the First National Bank. 
E) Eileen will not lose her $10,000 unless there is a run on the First National Bank. 
A) Eileen will lose her $10,000. 
B) Eileen will lose her $10,000 if she and Norma are related. 
C) Eileen will lose her $10,000 if the First National Bank makes all of its loans to people who run off to South Pacific islands. 
D) Eileen will not lose her $10,000 no matter what happens to the First National Bank. 
E) Eileen will not lose her $10,000 unless there is a run on the First National Bank.

Question 9

The value of money is determined by

Accepted Answer

A) people's belief that it is worth something 
B) the amount of precious metal that the government holds to back the money 
C) the money's market value as a commodity 
D) the rate of interest, which is the price paid to borrow money 
E) its ability to function as a unit of account 
A) people's belief that it is worth something 
B) the amount of precious metal that the government holds to back the money 
C) the money's market value as a commodity 
D) the rate of interest, which is the price paid to borrow money 
E) its ability to function as a unit of account

Question 10

Gresham's Law states that people

Accepted Answer

A) sell goods for money but prefer to buy goods with other goods 
B) buy and sell goods with money 
C) spend some money and hoard some money 
D) spend lower-quality money and hoard higher-quality money 
E) spend higher-quality money and hoard lower-quality money 
A) sell goods for money but prefer to buy goods with other goods 
B) buy and sell goods with money 
C) spend some money and hoard some money 
D) spend lower-quality money and hoard higher-quality money 
E) spend higher-quality money and hoard lower-quality money

Question 11

The currency of Camelot is the noble. King Arthur orders the minting of a five-noble gold coin, but it costs only four nobles to mine and process the amount of gold in the coin. Which of the following statements is true?

Accepted Answer

A) Five-noble coins will not be accepted in exchange. 
B) Five-noble coins will be accepted only by the government. 
C) When King Arthur spends these coins, he profits. 
D) When King Arthur takes these coins in again in the form of taxes, he profits. 
E) When these coins circulate through spending or taxation, King Arthur receives a profit of one noble, less seigniorage. 
A) Five-noble coins will not be accepted in exchange. 
B) Five-noble coins will be accepted only by the government. 
C) When King Arthur spends these coins, he profits. 
D) When King Arthur takes these coins in again in the form of taxes, he profits. 
E) When these coins circulate through spending or taxation, King Arthur receives a profit of one noble, less seigniorage.

Question 12

Which of the following would not perform well as money?

Accepted Answer

A) coins 
B) sea shells 
C) honey 
D) diamonds 
E) cigarettes 
A) coins 
B) sea shells 
C) honey 
D) diamonds 
E) cigarettes

Question 13

When prices rise,

Accepted Answer

A) the purchasing power of money increases 
B) the purchasing power of money decreases 
C) the purchasing power of money remains unchanged 
D) the purchasing power of money either increases or decreases, depending upon the size of the national debt 
E) the purchasing power of money either increases or decreases, depending upon the level of government expenditures 
A) the purchasing power of money increases 
B) the purchasing power of money decreases 
C) the purchasing power of money remains unchanged 
D) the purchasing power of money either increases or decreases, depending upon the size of the national debt 
E) the purchasing power of money either increases or decreases, depending upon the level of government expenditures

Question 14

Before the specialization

Accepted Answer

A) families were largely self-sufficient 
B) families produced much more than they could each consume 
C) there was a great need for exchange between families 
D) families consumed much more than they could each produce 
E) None of the answers is correct 
A) families were largely self-sufficient 
B) families produced much more than they could each consume 
C) there was a great need for exchange between families 
D) families consumed much more than they could each produce 
E) None of the answers is correct

Question 15

Which of the following have, at one time or another, been part of the U.S. money supply?

Accepted Answer

A) seashells 
B) platinum coins 
C) token money 
D) legal tender 
E) private bank notes 
A) seashells 
B) platinum coins 
C) token money 
D) legal tender 
E) private bank notes

Question 16

The actions of the Fed

Accepted Answer

A) must be approved by the president and the Congress 
B) must be approved by the president alone 
C) must be approved by the Congress alone 
D) are not subject to approval by any branch of government 
E) are subject to the approval of the electorate 
A) must be approved by the president and the Congress 
B) must be approved by the president alone 
C) must be approved by the Congress alone 
D) are not subject to approval by any branch of government 
E) are subject to the approval of the electorate

Question 17

The unit of account function of money

Accepted Answer

A) all of the following are correct 
B) means that money makes price information more accessible 
C) requires that money be made of something valuable 
D) means that money can be used to save up purchasing power 
E) means that money is more easily counted than goods 
A) all of the following are correct 
B) means that money makes price information more accessible 
C) requires that money be made of something valuable 
D) means that money can be used to save up purchasing power 
E) means that money is more easily counted than goods

Question 18

Which of the following countries has the most number of banks among the top 25 based on worldwide assets?

Accepted Answer

A) France 
B) Japan 
C) United Kingdom 
D) Netherlands 
E) United States 
A) France 
B) Japan 
C) United Kingdom 
D) Netherlands 
E) United States

Question 19

To say that money serves as a store of value is to say that money is a useful way to store wealth for future use.

Accepted Answer

A) True 
 B)False

Question 20

In prisoner of war camps during WWII which common commodity often served the function of money?

Accepted Answer

A) chocolate bars 
B) cigarettes 
C) cans of tuna fish 
D) bars of soap 
E) band aids 
A) chocolate bars 
B) cigarettes 
C) cans of tuna fish 
D) bars of soap 
E) band aids

Exam 15: Money and the Financial System

A bank holding company is

When the Federal Reserve System was established,

The more specialized labor is,

U.S. banks have grown primarily through

All of the following are reasons that cigarettes came to serve as money in WWII prisoner of war camps except one. Which is the exception?

Bank holding companies

Gresham's Law states that when different forms of commodity money circulate simultaneously (e.g., $1 gold coins and $1 silver coins),

Eileen puts $10,000 in a federally insured checking account at the First National Bank. Norma borrows $10,000 from the First National Bank, flies to a South Pacific island, and is never heard from again. Which of the following is true?

The value of money is determined by

Gresham's Law states that people

The currency of Camelot is the noble. King Arthur orders the minting of a five-noble gold coin, but it costs only four nobles to mine and process the amount of gold in the coin. Which of the following statements is true?

Which of the following would not perform well as money?

When prices rise,

Before the specialization

Which of the following have, at one time or another, been part of the U.S. money supply?

The actions of the Fed

The unit of account function of money

Which of the following countries has the most number of banks among the top 25 based on worldwide assets?

To say that money serves as a store of value is to say that money is a useful way to store wealth for future use.

In prisoner of war camps during WWII which common commodity often served the function of money?

The Art and Science of Economic Analysis

Understanding Graphs-Appendix

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the Us Economy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Agregate Demand

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

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