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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. The currency banks hold in their vaults plus their deposits at the Federal Reserve
store of value
credit
bank reserves
What does the Federal Reserve do?
2. Funds acquired by borrowing
money market mutual funds
credit
federal funds market
fiat money
3. 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.
depository institutions
What does the U.S. Treasury do?
M2 (money supply)
money
4. 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.
demand deposits
potential deposit expansion multiplier
money market mutual funds
monetary base
5. 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
M1 (money supply)
federal funds market
Federal Open Market Committee
liquid asset
6. An asset that can be easily & quickly converted to purchasing power
currency
medium of exchange
liquid asset
Federal Open Market Committee
7. The decion making center of the Federal Reserve
central bank
board of governors
What does the U.S. Treasury do?
money
8. Unit of measurement used by people to post prices & keep track of revenues &costs
unit of account
credit
central bank
M2 (money supply)
9. Buying and selling of government securities in the open market by the Fed
currency
potential deposit expansion multiplier
depository institutions
open market operations
10. 1. Oversees the monetary climate of the economy 2. Does not issue bonds 3. Determines the money supply
fractional reserve banking
3 Major centers of decision making within the Federal Reserve
bank reserves
What does the Federal Reserve do?
11. The central bank of the United States; it carries out banking regulatory policies and is responsible for the conduct of monetary policy
central bank
potential deposit expansion multiplier
Federal Reserve System
open market operations
12. Financial institutions that offer a wide range of services (checking - savings etc.)
fiat money
commerical banks
required reserves
demand deposits
13. 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
required reserves
What does the Federal Reserve do?
demand deposits
14. The item commonly used to pay for goods - services - assets & outstanding debts
fiat money
medium of exchange
What does the U.S. Treasury do?
money
15. A system that permits banks to hold reserves of less than 100% against their deposits
potential deposit expansion multiplier
monetary base
federal funds market
fractional reserve banking
16. 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.
federal funds market
Federal Deposit Insurance Corporation (FDIC)
demand deposits
What does the U.S. Treasury do?
17. An asset that is used to buy and sell goods or services
required reserve ratio
open market operations
discount rate
medium of exchange
18. The sum of (1) currency in circulation (including coins) - (2) checkable deposits maintained in depository institutions - and (3) traveler's checks.
required reserves
monetary base
fiat money
M1 (money supply)
19. Reserves greater than the required amounts
open market operations
excess reserves
credit
currency
20. An asset that can be easily & quickly converted to cash
demand deposits
currency
unit of account
liquid asset
21. Money that has no intrinsic value nor the backing of a commodity with intrinsic value. paper currency is an example
fiat money
medium of exchange
federal funds market
discount rate
22. Financial institutions that accept deposits in exchange for shares that pay dividends.
commerical banks
savings and loan associations
liquid asset
potential deposit expansion multiplier
23. 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.
What does the U.S. Treasury do?
liquid asset
central bank
potential deposit expansion multiplier
24. A government corporation that insures bank deposits
central bank
Federal Deposit Insurance Corporation (FDIC)
Federal Reserve System
3 Major centers of decision making within the Federal Reserve
25. Balances in bank accounts that depositors can access on demand by writing a check (checking accounts)
What does the Federal Reserve do?
What does the U.S. Treasury do?
demand deposits
money
26. A financial institution owned by its members that provides savings and checking accounts and other services to its membership at low fees.
required reserve ratio
credit unions
M1 (money supply)
demand deposits
27. The metal or paper medium of exchange
board of governors
central bank
currency
What does the Federal Reserve do?
28. 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
store of value
Federal Open Market Committee
currency
29. The minimum fraction of deposits banks are required by law to keep as reserves.
required reserve ratio
liquid asset
Federal Open Market Committee
money market mutual funds
30. 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.
money
savings and loan associations
required reserves
Federal Open Market Committee
31. The interest rate on the loans that the Fed makes to banks
Federal Open Market Committee
What does the Federal Reserve do?
money
discount rate
32. An institution designed to oversee the banking system and regulate the quantity of money in the economy
central bank
monetary base
credit
discount rate
33. 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
open market operations
commerical banks
money
What does the U.S. Treasury do?
34. An asset that will allow people to transfer purchasing power from one period to the next
fractional reserve banking
What does the U.S. Treasury do?
store of value
money
35. 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.
Federal Open Market Committee
depository institutions
deposit expansion multiplier
open market operations
36. 1. Board of governors 2. District & Regional Banks 3. Federal open market committee
credit unions
3 Major centers of decision making within the Federal Reserve
fiat money
depository institutions