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Test your basic knowledge |
The Banking System
Start Test
Study First
Subject
:
industries
Instructions:
Answer 36 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Unit of measurement used by people to post prices & keep track of revenues &costs
central bank
unit of account
required reserves
credit
2. An asset that will allow people to transfer purchasing power from one period to the next
liquid asset
store of value
central bank
liquid asset
3. An institution designed to oversee the banking system and regulate the quantity of money in the economy
M1 (money supply)
deposit expansion multiplier
fiat money
central bank
4. Balances in bank accounts that depositors can access on demand by writing a check (checking accounts)
demand deposits
store of value
required reserve ratio
Federal Deposit Insurance Corporation (FDIC)
5. An asset that can be easily & quickly converted to cash
savings and loan associations
deposit expansion multiplier
liquid asset
money
6. 1. Oversees the monetary climate of the economy 2. Does not issue bonds 3. Determines the money supply
discount rate
M1 (money supply)
depository institutions
What does the Federal Reserve do?
7. The currency banks hold in their vaults plus their deposits at the Federal Reserve
open market operations
Federal Reserve System
bank reserves
money
8. A loanable funds market in which banks seeking additional reserves borrow short-term funds (generally for seven days or less) from banks with excess reserves. The interest rate in this market is called the federal funds rate.
depository institutions
fiat money
federal funds market
What does the U.S. Treasury do?
9. The sum of currency in circulation plus bank reserves (vault cash and reserves with the Fed). It reflects the stock of U.S. securities held by the Fed.
What does the Federal Reserve do?
deposit expansion multiplier
discount rate
monetary base
10. A system that permits banks to hold reserves of less than 100% against their deposits
fractional reserve banking
commerical banks
fiat money
potential deposit expansion multiplier
11. A committee of the Federal Reserve system that establishes Fed policy with reguard to the buying & selling of gov. securities - Primary mechanism used to control the money supply -.Composed of the 7 members of the Board of Governors and the 12 distri
Federal Open Market Committee
excess reserves
board of governors
deposit expansion multiplier
12. Funds acquired by borrowing
central bank
open market operations
credit
demand deposits
13. Money that has no intrinsic value nor the backing of a commodity with intrinsic value. paper currency is an example
money market mutual funds
fiat money
fractional reserve banking
medium of exchange
14. The metal or paper medium of exchange
bank reserves
federal funds market
excess reserves
currency
15. Equal to M1 plus (1) savings deposits - (2) time deposits (accounts of less than $100000) held in depository institutions - and (3) money market mutual fund shares.
demand deposits
liquid asset
Federal Reserve System
M2 (money supply)
16. Reserves greater than the required amounts
required reserve ratio
M1 (money supply)
monetary base
excess reserves
17. Interest earning accounts offered by brokerage firms that pool depositor;s funds and invest them in highly liquid short-term securities
money market mutual funds
federal funds market
fiat money
deposit expansion multiplier
18. A financial institution owned by its members that provides savings and checking accounts and other services to its membership at low fees.
credit unions
savings and loan associations
required reserves
What does the U.S. Treasury do?
19. The minimum fraction of deposits banks are required by law to keep as reserves.
M2 (money supply)
Federal Reserve System
required reserve ratio
commerical banks
20. 1. Board of governors 2. District & Regional Banks 3. Federal open market committee
open market operations
bank reserves
3 Major centers of decision making within the Federal Reserve
currency
21. The minimum amount of reserves that a bank is required by law to keep on hand to back up its deposits. If reserve requirements were 15 percent - banks would be required to keep $150000 in reserves against each $1 million of deposits.
M2 (money supply)
federal funds market
fiat money
required reserves
22. A government corporation that insures bank deposits
3 Major centers of decision making within the Federal Reserve
M2 (money supply)
excess reserves
Federal Deposit Insurance Corporation (FDIC)
23. Businesses that accept checking and savings deposits and use a portion of them to extend loans and make investments. Banks - savings and loan associations - and credit unions are examples.
monetary base
potential deposit expansion multiplier
What does the Federal Reserve do?
depository institutions
24. 1. Oversees the finances of the federal government 2.Issues bonds to the public to finance the budget deficits of the goverment 3. Does not determine the money supply
What does the U.S. Treasury do?
commerical banks
unit of account
required reserve ratio
25. The interest rate on the loans that the Fed makes to banks
required reserve ratio
savings and loan associations
discount rate
bank reserves
26. An asset that can be easily & quickly converted to purchasing power
Federal Deposit Insurance Corporation (FDIC)
depository institutions
central bank
liquid asset
27. Buying and selling of government securities in the open market by the Fed
open market operations
store of value
credit unions
What does the U.S. Treasury do?
28. The item commonly used to pay for goods - services - assets & outstanding debts
3 Major centers of decision making within the Federal Reserve
savings and loan associations
board of governors
money
29. The maximum potential increase in the money supply as a ratio of the new reserves injected into the banking system. It is equal to the inverse of the required reserve ratio.
savings and loan associations
potential deposit expansion multiplier
unit of account
discount rate
30. Financial institutions that accept deposits in exchange for shares that pay dividends.
savings and loan associations
money
bank reserves
liquid asset
31. The multiple by which an increase in reserves will increase the money supply. It is inversely related to the required reserve ratio.
deposit expansion multiplier
open market operations
central bank
credit unions
32. The decion making center of the Federal Reserve
currency
bank reserves
board of governors
discount rate
33. The sum of (1) currency in circulation (including coins) - (2) checkable deposits maintained in depository institutions - and (3) traveler's checks.
M1 (money supply)
credit
commerical banks
credit unions
34. An asset that is used to buy and sell goods or services
discount rate
bank reserves
store of value
medium of exchange
35. The central bank of the United States; it carries out banking regulatory policies and is responsible for the conduct of monetary policy
board of governors
Federal Reserve System
savings and loan associations
Federal Deposit Insurance Corporation (FDIC)
36. Financial institutions that offer a wide range of services (checking - savings etc.)
What does the U.S. Treasury do?
demand deposits
commerical banks
depository institutions