WorksheetsEconomics and Monetary Policy Quiz
Total questions: 28
Worksheet time: 14mins
If spending in the economy is too low, the Federal Reserve would probably…
Print additional currency
Raise the discount rate
Implement an expansionary monetary policy
Implement a contractionary monetary policy
Which of the following explanations is a characteristic/cause of inflation?
Too much savings by households
Too much investment by businesses
Lack of employment opportunities
Too much money chasing too few goods/services
Which of the following is a characteristic of a recession?
A high rate of production
Increased job availability
Increased consumer spending
A high rate of business failures
One measure used by the Federal Reserve to regulate the money supply is to…
Raise the FDIC rate
Increase or decrease the discount rate
Raise income taxes
Decrease capital improvements
Which of the following is NOT a function of Monetary Policy and the Federal Reserve System?
Setting reserve requirements for banks
Buying and selling government bonds
Charging a discount rate on loans to banks
All of the above are functions of the FED
People with fixed incomes…
are hurt by inflation because their purchasing power drops
are not really affected by inflation
are helped by inflation because their dollars go further
may be helped by inflation if they are encouraged to save
The Consumer Price Index (CPI) measures:
Changes in consumer income
Rate of inflation
Economic growth
Supply and demand of products
The Reserve Requirement is a tool that the Fed uses to control the money supply in our economy. Exactly what is the reserve requirement?
Refers to the amount of cash that banks must have, in their vaults or at the closest Federal Reserve bank, in line with deposits made by their customers.
Refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal Reserve Bank
Refers to the buying and selling of federal government bonds in order to influence the money supply and interest rate
Refers to the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight
A hurricane in Florida destroys most of the oranges it produces. A likely result would be:
A surplus of oranges
A decrease in the demand for oranges
A decrease in the price of oranges
An increase in the price of oranges
The Federal Deposit Insurance Corporation (FDIC) insures your money if
an ATM malfunctions.
the bank goes out of business.
your boss takes too much tax out of your paycheck.
you find a negative balance in your bank account.
When a check has been written but not paid by the bank, it means that
the depositor cannot reconcile his bank statement
the bank lost the check
the check is still outstanding
the drawer wrote the wrong date on the check
Bobbi is a teacher. She has decided to bank at a teacher’s credit union. What best describes what a credit union is?
A financial institution that accepts deposits; offers checking account services; makes business, personal and mortgage loans; and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses.
A financial institution that lends money mainly for home mortgage loans, they may offer checking accounts and other services.
A financial institution that is nonprofit and aims to serve its members rather than make a profit.
The central bank of the United States and arguably the most powerful financial institution in the world.
What is the safest way to endorse a check?
No endorsement required
Signature
Pay to the order of Mary Moss, signature
For deposit only, signature
Which of the following operates much the same as a check?
credit card
charge card
debit card
all of the above
The FDIC insures each depositor in member banks up to
$200,000
$150,000
$100,000
$250,000
An instruction given to a bank not to process a particular check that is already been written is called a(n)
NSF order
certification order
dishonor order
stop payment order
Which of the following statements about ATM’s is true?
There is no limit as to how much you can withdraw each day
ATMSs have the same banking hours as their corresponding banks
There may be a transaction fee for using another banks ATM other than your own
The only thing you can do at an ATM is withdraw money from your account
What is a stale check?
a check for which payment is guaranteed
a check more than 6 months old
a check written in advance of the current date
a check more than 3 weeks old
Banks earn most of their profits by
investing their customers’ money in the stock market
charging for checking account services
encouraging people to save their money at the bank
loaning their customers’(individuals and businesses) money
In deciding where to save your money, one DISADVANTAGE of a savings account is that
the bank guarantees a rate of interest.
your money is used by the bank to write loans to others.
the rate of growth is lower than inflation.
your money doesn't have liquidity.
Stan does not reconcile his checking account. In fact, many times he doesn’t even know how much he has in his account. Which of the following fees might he incur due to his carelessness?
Overdraft Charge
Minimum Balance Charge
All of the above
None of the above
When considering whether to keep your money at a particular bank, you have the right to see a copy of the fee schedule, a complete list of account fees that the bank charges. You have this right because of the
Constitution.
Fair Labor and Standards Act.
Federal Deposit Insurance Corporation.
Truth in Savings Act.
If you see a transaction you don't recognize on your bank statement, and believe it is a charge either by mistake or fraud, what step should you take first?
Call your credit card company
Call the police
Wait to see if it is corrected on next month's bank statement
Call the bank
The purpose of reconciling your bank statement to your checking account is to:
Look for errors by your bank
Look for errors by you
See if there are any checks or deposits outstanding
All of the above
True or False. When banks pay interest on both the principal and accrued interest this is called compound interest.
True
False
True or False. An advantage of a joint checking account is that two people can easily access the account without permission from the other person.
True
False
True or False. Signature cards protect your account by stopping people from forging your name to withdraw money.
True
False
True or False. NSF refers to using overdraft protection to prevent bouncing a check.
True
False
