Test your basic knowledge |

The Banking System

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 item commonly used to pay for goods - services - assets & outstanding debts






2. The sum of (1) currency in circulation (including coins) - (2) checkable deposits maintained in depository institutions - and (3) traveler's checks.






3. The interest rate on the loans that the Fed makes to banks






4. Buying and selling of government securities in the open market by the Fed






5. Financial institutions that offer a wide range of services (checking - savings etc.)






6. Money that has no intrinsic value nor the backing of a commodity with intrinsic value. paper currency is an example






7. The central bank of the United States; it carries out banking regulatory policies and is responsible for the conduct of monetary policy






8. 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






9. The decion making center of the Federal Reserve






10. 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.






11. 1. Board of governors 2. District & Regional Banks 3. Federal open market committee






12. 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.






13. Balances in bank accounts that depositors can access on demand by writing a check (checking accounts)






14. 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






15. An asset that can be easily & quickly converted to purchasing power






16. The currency banks hold in their vaults plus their deposits at the Federal Reserve






17. An asset that can be easily & quickly converted to cash






18. A financial institution owned by its members that provides savings and checking accounts and other services to its membership at low fees.






19. 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.






20. An asset that is used to buy and sell goods or services






21. 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.






22. Interest earning accounts offered by brokerage firms that pool depositor;s funds and invest them in highly liquid short-term securities






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.






24. The metal or paper medium of exchange






25. A system that permits banks to hold reserves of less than 100% against their deposits






26. 1. Oversees the monetary climate of the economy 2. Does not issue bonds 3. Determines the money supply






27. A government corporation that insures bank deposits






28. An institution designed to oversee the banking system and regulate the quantity of money in the economy






29. Reserves greater than the required amounts






30. 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.






31. The multiple by which an increase in reserves will increase the money supply. It is inversely related to the required reserve ratio.






32. An asset that will allow people to transfer purchasing power from one period to the next






33. Unit of measurement used by people to post prices & keep track of revenues &costs






34. Funds acquired by borrowing






35. The minimum fraction of deposits banks are required by law to keep as reserves.






36. Financial institutions that accept deposits in exchange for shares that pay dividends.