Econ SS Unit 7

Which of the following is referred to as a demand deposit?

• money market mutual fund

• savings accounts

• checking accounts

• liability

Which of the following is NOT a functional of the Federal reserve?

• check clearing services

• providing checking accounts to consumers

• issues currency

• supervise actions of banks

If required reserves are set at 20%, how much of a $100,000 deposit must a bank keep on hand?

• $12,500

• $20,000

• $30,000

• $50,000

What do we call an item that has value of its own, but also is used as money?

• commodity money

• reserve money

• fiat money

• discount money

What must a bank have available in order to make loans?

• legal reserves

• member bank reserves

• reserve requirements

• excess reserves

Why do we have a reserve requirement?

• to make sure that banks have a dependeable source of interest income

• to keep banks from holding too much cash in their vautls

• so that commercial banks can't earn excessive profit

• so the Fed has control over banks' lending ability

What is fiat money?

• it has intrinsic value and desirable properties

• it has value only because the government says it does

• money used for a car loan

• trading shells and salt for other goods or services

In the Fed, how many years does the a member of the Board of Governors serve?

• 20

• 14

• 10

• 7

In the Fed, how often do the staggered terms expire?

• Every 5 years

• Every 2 years

• Every 3 years

• annually

Why did the government start to regulate banks so closely?

• because of inflation in the 1980s

• because foreign nations asked us to

• because the treasury department needed more responsibility

• because many banks failed during the Great Depression