Which institution manages a country's currency and monetary policy?

Bureau of Engraving and Printing

Why was the Federal Reserve created?

To prevent future financial crises

Who signed the Federal Reserve Act into law?

President Franklin D. Roosevelt

Which federal agency is responsible for producing paper money used for making purchases?

United States Bureau of Engraving and Printing

What are Federal Reserve notes made out of and what are their features?

Cotton-linen blend with security measures like watermarks and security threads

Metal with raised lines or edges to prevent counterfeiting

Paper with a strip embedded in the currency that glows under UV light

Ink that changes color when viewed from different angles

How does the Federal Reserve use open market operations to influence the economy?

By buying and selling government securities

By directly controlling the money supply

By setting interest rates for all banks

By regulating the amount of currency in circulation

What is the purpose of reserve requirements set by the Federal Reserve?

To ensure banks have enough funds to cover withdrawals

To limit the amount of money banks can lend

To encourage banks to invest in government securities

To regulate the interest rates charged by commercial banks

How does the Federal Reserve use the discount rate to affect the economy?

By providing loans to commercial banks at a specific interest rate

By directly controlling interest rates for all banks

By regulating the interest rates charged by commercial banks

By buying and selling government securities in the open market

What is the role of the Federal Open Market Committee (FOMC) in the Federal Reserve System?

To set monetary policy and make decisions regarding interest rates

To oversee the operations of commercial banks

To regulate the amount of currency in circulation

To ensure banks maintain enough reserves to cover withdrawals

How does the Federal Reserve use monetary policy to combat inflation?

By increasing government spending

By decreasing interest rates to stimulate borrowing and spending

By regulating the amount of currency in circulation

What is the impact of an expansionary monetary policy on the economy?

It stimulates economic growth and increases borrowing and spending

It leads to higher interest rates and reduced borrowing

It reduces inflation and stabilizes prices

It encourages banks to take on more risk

How does the Federal Reserve use contractionary monetary policy to address economic overheating?

By increasing interest rates to reduce borrowing and spending

By decreasing government spending

By regulating the amount of currency in circulation

What is the purpose of the Federal Reserve's role as the lender of last resort?

To stabilize the financial system during times of crisis

To provide loans to individuals and businesses during a recession

To ensure banks have enough funds to cover withdrawals

To regulate the interest rates charged by commercial banks

A form of currency made of paper that represents a certain value.

What is denomination?

The value or face amount of a coin or banknote

A design that is visible when held up to light

A mark indicating the highest level of water reached

A mark used to identify the owner of a document

A mark indicating the quality of a product

What is a security thread?

A thin ribbon embedded in banknotes to prevent counterfeiting

What is color shifting ink?

A type of ink that changes color when viewed from different angles

A type of ink that is invisible under normal light

A type of ink that glows in the dark

A type of ink that is used for printing money

Why does the U.S. government issue coins and currency?

To make the buying goods and services easy

To maintain control of the U.S. mints

To display the portraits of great former presidents

Unit 1: History of Money Exam Review

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39 Qs

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Practice Problem

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Datrell Morgan

Used 4+ times

FREE Resource

39 questions

Show all answers

MULTIPLE CHOICE QUESTION

1 min • 2 pts

Which of the following terms refers to the process by which the Federal Reserve controls the money supply and interest rates to achieve economic goals?

Commercial banking

Monetary policy

Financial stability

Bartering

MULTIPLE CHOICE QUESTION

1 min • 2 pts

What is the system of production, distribution, and consumption of goods and services in a country called?

Economy

Inflation

Recession

Monetary policy

MULTIPLE CHOICE QUESTION

1 min • 2 pts

Money borrowed from banks that must be repaid with interest is known as:

Deposits

Currency

Loans

Bartering

MULTIPLE CHOICE QUESTION

1 min • 2 pts

What is the term for money kept in banks by individuals and businesses?

Loans

Deposits

Currency

Inflation

MULTIPLE CHOICE QUESTION

1 min • 2 pts

Which of the following are financial institutions that accept deposits and provide loans to individuals and businesses?

Commercial banks

Federal Reserve banks

Central banks

Bartering systems

MULTIPLE CHOICE QUESTION

1 min • 2 pts

What is the cost of borrowing money or the return on savings called?

Inflation

Interest rates

Monetary policy

Financial stability

MULTIPLE CHOICE QUESTION

1 min • 2 pts

What is the increase in prices over time called?

Recession

Inflation

Deposits

Bartering

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Unit 1: History of Money Exam Review

39 questions

Which of the following terms refers to the process by which the Federal Reserve controls the money supply and interest rates to achieve economic goals?

What is the system of production, distribution, and consumption of goods and services in a country called?

Money borrowed from banks that must be repaid with interest is known as:

What is the term for money kept in banks by individuals and businesses?

Which of the following are financial institutions that accept deposits and provide loans to individuals and businesses?

What is the cost of borrowing money or the return on savings called?

What is the increase in prices over time called?

A period of economic decline characterized by reduced spending and higher unemployment is known as:

What is the condition where the financial system operates smoothly and without disruptions called?

Which institution manages a country's currency and monetary policy?

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