Money, Banking, and the Federal Reserve System

Money

• represents near-money
• is a good that is widely accepted as payment.
• is backed by gold.
• includes bills, not coins.

At the top of a dollar bill you will see the words

• Central Bank Note.
• Dollar Bill.
• Federal Reserve Note.
• U.S. Currency.

A traveler's check is issued by

• a retail store.
• a bank.
• a travel agency.
• the Fed.

We refer to the Fed as the central bank because it is

• located in the middle of the country.
• the most important bank in the world.
• between Canada and Mexico.
• the chief monetary authority in the country.

The agency responsible for determining the money supply and supervising banks in the

• U.S. Bank.
• U.S. Treasury.
• Federal Reserve.
• Bureau of Printing and Engraving.

The purpose of a central bank is to

• control the money supply.
• provide check clearing processes.
• hold bank reserves.
• All of the above.

The Fed's activities are controlled by the

• U.S. Treasury.
• Board of Governors.
• Federal Open Market Committee.
• president and Congress.

The Board of Governors of the Federal Reserve consists of

• 7 members.
• 5 members.
• 12 members.
• 17 members.

Members of the Board of Governors are appointed to

• 2-year terms
• 7-year terms.
• 14-year terms.
• lifetime terms.

Transaction costs include

• the time necessary to make the trade.
• the effort expanded to make the trade.
• the money used for the purchase.
• Both a and b.