Functions of Money Quiz

Milin puts her money into a piggy bank and saves it so she can spend it later. What function of money does this illustrate?

• medium of exchange

• store of value

• unit of account

• fiat money

Money allows us to compare the value/cost of goods, services, or assets, which serves as a

• medium of exchange

• unit of account/standard of value

• store of value

• liquid asset

The nickname for the agency that monitors the fiat money system is the

• Fed

• Big Bank

• Ben

• Greeny

The Federal Open Market Committee (FOMC) is made up of:

• the members of the Board of Governors and the President and Secretary of the Treasury.

• the members of the Board of Governors.

• the members of the Board of Governors and all of the District bank Presidents.

• the members of the Board of Governors

If the required reserve ratio is 10%, what would a bank have available to loan to borrowers on a $1000 deposit?

• $100

• $1000

• $900

• $850

• $50

If the Fed wanted to bring the United States out of a recession, which of the following sequences would make the most sense?

• A) Lower | Sell Bonds | Raise | Raise

• B) Raise | Buy Bonds | Lower | Lower

• C) Lower | Buy Bonds | Lower | Lower

• D) Lower | Buy Bonds | Raise | Raise

• E) Lower | Sell Bonds | Lower | Lower

Suppose that Joanne deposits in her checking account $1000 in cash that she received for a graduation present. How does this immediately change the M1 money supply?

• no change until the bank loans the money fractionally

• increase of $1,000

• decrease of $1,000

• multiplies to $10,000

Suppose the Fed buys $10 million in bonds from Bank of America. What is the immediate effect on the M1 money supply?

• no change

• $10 million

• $100 million

• $90 million

Imagine that the Fed buys $10 million in bonds from First United Bank. How will First United Bank's demand deposits change immediately following the purchase?

• no change

• increase of $10 million

• decrease of $10 million

• additional $100 million

If the required reserve ratio is 20%, what would a bank have available in excess reserves (could be loaned) on a $2000 deposit?

• 400

• 1000

• 1600

• 200