Eco Unit 4 Test Review

Commodity money can best be described as

• trade goods or services between two people without the exchange of money

• currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves

• a form of money which has an intrinsic value, meaning it is worth something in its own right rather than simply being a token of financial value

One of the disadvantages of operating a barter system is that trading is –

• taking place without currency

• carried out in very large markets

• limited by availability and demand

One advantage to using a debit card is that it allows the user to

• build a strong credit score

• repay credit card debts faster

• access currency without carrying cash

• purchase goods without having any money

The Federal Reserve System designed in the manner described above resulted in the creation of-

• reserve bank satellite locations

• a decentralized system of banks

• new methods for printing money

Which of the following best completes the graphic?

• Nationally chartered bank members

• Stock Exchange

• Federal Reserve System

• Treasury Department

One way the Federal Reserve can counter unemployment and stimulate spending is by -

• decreasing the discount rate

• tightening monetary policies

• increasing the reserve requirement

In order to require banks to hold more money as opposed to lending it, the Federal Reserve can

• decrease the discount rate

• decrease the federal funds rate

• increase the reserve requirement

Which of the following is an action of the Federal Reserve that strongly influences local economies?

• suspend the federal funds rate target

• It can raise or lower property taxes

• It can provide stimulus money for job creation

• It can make loans cheaper or more expensive by adjusting interest rates

Open market operations, the discount rate, and reserve requirements are used by the Federal Reserve to most directly affect the

• amount of taxes collected

• minimum wages of workers

• cost of doing business overseas

• supply of money in the economy

During an economic recession the Federal Reserve Banks will most likely react by

• easing "easy money" monetary policy making it easier to lend money

• raising the discount rate to affect the monetary supply

• tightening "tight money"monetary policy making lending more difficult