Bank Transactions: Checking/Debit

_____ money has value because the government says it has value.

• fiat
• representative
• commodity
• counterfeit

How is money created?

• when a bank makes a loan
• when a bank receives a deposit
• when a consumer makes a purchase
• when the government prints money

Which of the following aggregates used to measure the money supply includes time-related accounts that hold less than $100,000?

• M2
• M4
• M3
• M1

Which of the following is not a function of money?

• coincidence of wants
• unit of account
• medium of exchange
• store of value

What percentage of deposits are banks required to keep in reserves?

• 0.1
• 0.15
• 0.25
• 0.2

A _____ is used in commerce, particularly international trade.

• bill of exchange
• money order
• traveler's check
• cashier's check

Which of the following is not true of traveler's checks?

• They are used to pay a specific party.
• They are a type of draft.
• They can be refunded if lost or stolen.
• They can only be purchased at financial institutions.

Which of the following is not true of negotiable instruments?

• They carry a conditional promise to pay.
• They provide automatic proof of payment.
• They are more convenient than cash.
• They must carry the drawer's authorized signature.

If a payee's name is misspelled on a check, he or she should _____.

• endorse the check twice—once with the misspelling, and once spelled correctly
• endorse the check with the correctly spelled signature
• request a new check from the maker
• endorse the check with the misspelled signature

The _____ is the party who pays the value of the negotiable instrument.

• drawee
• maker
• payee
• drawer