Money Review Flashcard

Front

Which of the following does the Federal Reserve use to regulate the nation's money supply? Fiscal Policy, Proposing legislation, Monetary Policy, Regulation

Back

Monetary Policy

Answer explanation

The Federal Reserve uses Monetary Policy to regulate the nation's money supply. This involves managing interest rates and the availability of money to influence economic activity, unlike Fiscal Policy which is government spending and taxation.

Front

Which statement is FALSE about most ATM (Automated Teller Machine) cards? Options: You must have an account with a financial institution to have an ATM card. You can always get cash anywhere in the world with no fee. You can generally obtain information concerning your account balance(s) at an ATM machine. You can generally get cash 24 hours a day seven days a week.

Back

You can always get cash anywhere in the world with no fee

Answer explanation

The statement 'You can always get cash anywhere in the world with no fee' is false because many ATMs charge fees for withdrawals, especially internationally.

Front

A type of electronic funds transfer (EFT) is:

Back

An ATM transaction

Answer explanation

An ATM transaction is a type of electronic funds transfer (EFT) as it involves the electronic movement of money. The other options do not represent EFTs, making this the correct choice.

Front

Money in the United States includes: Gold, Checking account balances on which checks can be drawn, Barter, Diamonds

Back

Checking account balances on which checks can be drawn

Answer explanation

In the United States, money primarily includes checking account balances, which are liquid assets that can be used for transactions. Gold, barter, and diamonds are not considered standard forms of money in this context.

Front

Nora needed to buy food and did not have the cash, but had money in the bank. She was able to make the purchase by using her:

Back

Debit Card

Answer explanation

Nora used her debit card to make the purchase because it allows her to access the money in her bank account directly, unlike a credit card which borrows money.

Front

Money for saving, investing, or spending cannot be from: An inheritance from someone who has died, Discretionary income or a gift of money, Capital gains from a sale of stock, Capital losses from the sale of stock

Back

Capital losses from the sale of stock

Answer explanation

Capital losses from the sale of stock represent a decrease in value and do not provide funds for saving, investing, or spending. In contrast, inheritances, discretionary income, and capital gains do provide such funds.

Front

How can Susan get the $75 back after Marie withdrew $100 instead of the agreed $25?

Back

No bank or government agency is obligated to reimburse Susan because she authorized Marie to use her ATM card and PIN.

Answer explanation

Susan authorized Marie to use her debit card and PIN, making the withdrawal not unauthorized. Therefore, no bank or agency is obligated to reimburse her for the extra $75 taken.

Front

If Jami lost her debit card and did not report it missing for 3 months, what is her maximum liability if an unauthorized person used her debit card?

Back

$50

Answer explanation

Under the Electronic Fund Transfer Act, if a debit card is lost and not reported within 2 business days, the maximum liability is $500. However, since Jami did not report it for 3 months, her liability is limited to $50 for unauthorized use.

Front

When money is not used and goods and services are exchanged for other goods and services, this system is called:

Back

Barter

Answer explanation

The correct answer is 'Barter' because it refers to a system where goods and services are directly exchanged for other goods and services without using money.

Front

Which of the following is a disadvantage of using phone cards, debit cards, electronic transfers and ATM cards? Consumers can make purchases without writing a check, They expose consumers to greater likelihood of identity theft, They slow down the economy's recovery, They decrease availability of currency in the economy

Back

They expose consumers to greater likelihood of identity theft

Answer explanation

The correct choice highlights a significant risk associated with modern payment methods. Phone cards, debit cards, and electronic transfers can expose consumers to identity theft, as personal information may be more easily accessed by criminals.