Money, Banking, and Finance Review

Which of the following accurately completes the graphic?

• Types of money

• Federal Reserve notes

• Characteristics of money

• Functions of money

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

Money that has value simply because the government says it does is called —

• credit

• currency

• fiat money

• representative money

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

• conducted without consumer protections

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

Which of the following best completes the graphic?

• Stock Exchange

• Federal Reserve System

• Treasury Department

• Washington, D.C.

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

• selling securities

• 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

• suspend the federal funds rate target

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

• It can raise or lower property taxes.

• It can provide stimulus money for job creation.

• It can require banks to provide savings accounts to the community.

• 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