Chapter 11 Economics Review

What term refers to how available the money supply is?

• liquidity

• fiat

• tight monetary policy

• loose monetary policy

• divisibility

Which of these are functions of commercial banks?

• accepting deposits

• offering loans

• selling checkbooks

• stock brokering

• online banking services

What is the price of money?

• elections

• money supply

• purchasing power

• interest rates

How many Federal Reserve districts are there?

• 8

• 10

• 12

• 14

Which of these actions by the Fed will increase the money supply?

• Lowering interest rates

• Raising interest rates

• Selling securities

• Raising the reserve requirement

When the Fed buys securities from the open market, what effect does this have on the money supply?

• It increases the money supply

• It decreases the money supply

• This action has no effect on the money supply

A_____________ fund is a pool of money managed by an investment company that gathers money from individual investors and purchases a range of financial assets

___________ objective is a financial goal that an investor uses to determine if an investment is appropriate

__________ is the possibility for loss on an investment.

A__________ is the profit or loss made on an investment.

Fee charged to borrow money

• Inflation
• Interest
• Discount rate
• Reserve requirement