Ch. 10 - Money and Banking

Which function of money allows stores to have a standard price system for the goods and services they sell?

• Store of Value

• Medium of Exchange

• Unit of Account

• Dolla Dolla Bills

Money by government decree, has no alternative value or use as a commodity

• fiat

• commodity

• specie

• counterfeit

Which characteristic of money is crucial for it to last awhile in circulation?

• durability

• divisibility

• portability

• uniformity

Which of the following is actually a loan given to banks from consumers?

• checking accounts

• certificates of deposit

• savings accounts

• savings bonds

Which of the following is one of the three functions of money?

• portability

• scarcity

• store of value

• divisibility

Which of the following characteristic ensures that our money maintains its value over time?

• scarcity

• uniformity

• divisibility

• durability

How do banks increase the money supply?

• By printing their own money

• By getting loans from the Fed

• By issuing loans with their excess reserves

• They don't

If a consumers deposits $500 in the bank and the bank has to keep 10% in reserve, how much must they keep?

• $500

• $50

• $100

• $450

Using the money multiplier formula (1/RR), how much "new" money can be created with a RR of .25 and an initial excess reserve of $800

• $200

• $3200

• $2400

• $800

A $5000 deposit is made. The current reserve ratio is .1. How much money will the bank have in excess reserves?

• $500

• $4500

• $5000

• $2500