Preparing for the Test (Money)

Which of the following does the Federal Reserve use to regulate the nation's money supply?

• Fiscal Policy

• Proposing Legislation

• Monetary Policy

• Regulations

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

• Checks

• Barter

• Credit

• Money

"The Fed" is short for

• The Federal Reserve System

• Congress

• FBI

• Federal Deposit Insurance Corp

A man budgeted $200 a month for clothing. This month, the man spent $150 on clothing. Therefore, that budget item is considered to have

• an outflow deficit

• an income average

• a budget variance

• a budget deficit

A person complains about how expensive it is to be a cigarette smoker. One of the reasons cigarettes are so expensive is that

• The tobacco supply is controlled by the Federal Trade Commission

• The tobacco industry imports most of the tobacco

• Their cost is controlled by the Food & Drug Admin (FDA)

• The government imposes an excise tax on them

Jacob lost his debit card. If he reports his lost debit card within two business days, he can be held responsible for

• Up to $50 of unauthorized transactions

• Up to $500 of unauthorized transactions

• All unauthorized transactions

• No purchases

What action can the Federal Reserve System (Fed) take to stimulate the economy during a recession?

• Raise short-term interest rates

• Lower short-term interest rates

• Raise long-term interest rates

• Lower long-term interest rates

Your checking account has overdraft protection. If you spend more than the balance in your checking account, what is likely to happen?

• You'll be charged a fee AND pay interest on how much the bank lent you to cover the overdraft

• You'll need to deposit money before your monthly statement arrives

• You'll stop earning interest on your checking account

• Your credit card will get charged automatically

A person’s savings account earned interest. This person wants to know if he must pay taxes on the interest earned. What would the IRS tell him?

• Interest earned on checking & savings accounts aren't taxable

• A sales tax will be charged on interest earned

• Interest earned that is more than $10 is income and taxable

• If the interest is less than $50, it's not taxed

The interest rate that's paid on a money market account balance

• is set at the time of initial deposit

• varies depending on current interest rates

• is determined by the date you open the account

• fluctuates depending on your creditworthiness