Currency Paper Money Plus Coins Constitutes About
Question: Currency (paper money plus coins) constitutes about:
Answer: 43 percent of the U.S M1 money supply.
Question: In defining money as M1, economist exclude time deposits because
Answer: they are not directly or immediately a medium of exchange
Question: The money supply is backed
Answer: by the government's ability to control the supply of money and therefore to keep its value relatively stable.
Question: The purchasing power of money and the price level vary
Answer: inversely
Question: The Federal Reserve System was created in
Answer: 1913
Question: The Federal Open Market Committee (FOMC) is made up of
Answer: the seven members of the Board of Governors of the Federal Reserve System along with the president of the New York Federal Reserve Bank and four other Federal Reserve Bank presidents on a rotating basis.
Question: To say that the Federal Reserve Banks are quasi-public banks means that
Answer: they are privately owned but managed in the public interest
Question: The Federal Reserve System
Answer: is basically an independent agency.
Question: Commercial banks and thrift institutions
Answer: have become increasingly similar in the recent years
Question: Collateralized default swaps
Answer: insured holders of loan-backed securities in case they underlying loans were not repaid.
Question: The "shadow banking system" refers to
Answer: the process by which securities exchanges provide credit for personal and business needs apart from traditional bank lending.
Question: Which of the following statements is true about the high rate of mortgage defaults that contributed to the financial crisis of 2007 and 2008?
Answer: Prior to the rise in defaults, banks had become lax in their lending practices, resulting in a large number of bad loans.
Question: Some economist are concerned that he financial rescue provided by the TARP will encourage financial investors and firms to take on greater risks in the future. This is an example of
Answer: moral hazard
Question: Which of the following statements is correct?
Answer: A bank's liabilities plus its net worth equal its assets.
Question: A bank that has assets of $80 billion and a net worth of $10 billion must have
Answer: liabilities of $75 billion
Question: A bank that has liabilities of $150 billion and a net worth of $20 billion must have
Answer: assets of$170 billion
Question: The claims of owners of a firm against the firm's assets are called
Answer: net worth
Question: Which of the following are all assets to a commercial bank?
Answer: vault cash, property, and reserve
Question: Excess Reserves
Answer: the difference between actual reserves and its required reserves
Question: Commercial banks and thrifts
Answer: 6,000 commercial banks 8,500 Thrifts
Question: TARP
Answer: Troubled Assets Relief Program
Question: Balanced Sheet for a Bank
Answer: Assets=Liabilities+Net worth
Question: Reserve Ratio
Answer: commercial bank's required reserves/commercial bank's checkable-deposit liabilities
Question: Excess Reserve/ Required Reserve
Answer: actual reserves - required reservescheckable deposits- reserve ratio
Question: The Monetary Multiplier
Answer: 1/required reserve ratio