Module 6: Understanding the Banking System Review

Front

Which of the following is an example of how money is used today?
Options:
- Farmer Jones trades his chickens in return for shoes for his family.
- Alice uses gold coins to buy clothing.
- José trades his paper receipt to get his car washed.
- Alicia gives $20 of paper money to the pharmacist for medication.

Back

Alicia gives $20 of paper money to the pharmacist for medication.

Front

Aubrey dropped his quarter on the street and it got run over by a bike rider. Because the money is _____ it was not destroyed.

Back

durable

Front

Which of the following does not factor into how money is limited? Options: Only the government can print money., The government controls the amount of money in circulation., Only the government can coin money., Money can be divided into smaller amounts in various ways.

Back

Money can be divided into smaller amounts in various ways.

Front

Which of the following is true about fiat money? It is paper money that is backed by gold from the government., It is the type of money used for the U.S. dollar., It is only considered an acceptable payment by some U.S. businesses., It is used for purchases like food but not to pay debts.

Back

It is the type of money used for the U.S. dollar.

Front

Since money is a _____ you can use it to buy goods and services.

Back

medium of exchange

Front

Which of the following is the best example of money being a store of value? If you have $20 you could use it today or in a month from now to buy a new pair of sunglasses., You can trade a $10 bill for lunch at a fast food restaurant., You can compare the value of every laptop in the store when choosing the best one for you., You can sell your old lacrosse stick for the best price and use that money to buy a new video game.

Back

If you have $20 you could use it today or in a month from now to buy a new pair of sunglasses.

Front

The Federal Open Market Committee (FOMC) makes decisions that influence the amount of money and credit, known as the _____, in the U.S. economy.

Back

money supply

Front

What happens when the Fed raises interest rates?

Back

Consumers borrow and spend less money.

Front

By monitoring interactions between investors, savers, borrowers, and businesses, the Fed is trying to _____?

Back

stabilize the U.S. financial system

Front

Which of the following is not true about the Fed? It broke apart the centralized bank that operated in the U.S. and created national banks that act independently., It prevents banking disasters that cause people to panic., It is under the control of Congress., It is outside of political influence.

Back

It broke apart the centralized bank that operated in the U.S. and created national banks that act independently.