Prin of Macroeconomics
Prin of Macroeconomics BM 115
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This 0 page Class Notes was uploaded by Mr. Maxine Leffler on Sunday November 1, 2015. The Class Notes belongs to BM 115 at Mohawk Valley Community College taught by Staff in Fall. Since its upload, it has received 44 views. For similar materials see /class/233235/bm-115-mohawk-valley-community-college in Business Management at Mohawk Valley Community College.
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Date Created: 11/01/15
CHAPTER 12 Money and Banking 1 N 0 O H 19 0 To say money is socially defined means that A money has been defined in a Constitutional amendment B whatever performs the functions of money extremely well is considered to be money C the money supply includes all public and private securities purchased by society D society acting through Congress specifies what shall be included in the money supply Ans Money functions as A a store ofvalue B a unit of account C a medium of exchange D all of the above Ans When economists say that money serves as a medium of exchange they mean that it is A a way to keep wealth in a readily spendable form for future use B a means of payment C a monetary unit for measuring and comparing the relative values of goods D declared as legal tender by the government An When economists say that money serves as a unit of account they mean that it is A a way to keep wealth in a readily spendable form for future use B a means of payment C a monetary unit for measuring and comparing the relative values of goods D declared as legal tender by the government Ans The paper money used in the United States is A National Bank Notes B Treasury Notes Ans United States Notes Federal Reserve Notes C D The money supply is backed A by the governm ent39s ability to control the supply of money and therefore to keep its value relatively stable B by government bonds C dollarfordollar with gold and silver D dollarfordollar with gold bullion O L 0 so 0 0 so N Other things equal an excessive increase in the money supply will A increase the purchasing power of each dollar B decrease the purchasing power of each dollar C have no impact on the purchasing power of the dollar D reduce the price level Ans The basic policymaking body in the US banking system is the A Federal Open Market Committee FOMC C Federal Monetary Authority B Board of Governors of the Federal Reserve D Council of Economic Advisers Ans The twelve Federal Reserve Banks A are owned and operated by the US Treasury B were created in 1776 C hold the reserve deposits of commercial banks D are also known as national banks Ans The Federal Reserve System was created in A 1926 B 1946 C 1895 D 1913 Ans 1n the US economy the money supply is controlled by the A U S Treasury C B Federal Reserve System D Ans Senate Committee on Banking and Finance Congress The members of the Federal Reserve Board A serve sevenyear terms B are appointed by the American Economic Association C are elected by votes of the 12 presidents of the Federal Reserve Banks D serve 14year terms Ans An important routine function of the Federal Reserve Bank is to A supervise the liquidation of the assets of bankrupt state banks B help large commercial banks develop correspondent relationships with smaller commercial banks C advise commercial banks as to the most profitable ways of reinvesting profits D provide facilities by which commercial banks and thrift institutions may collect checks 84 Which of the following statements best describes the twelve Federal Reserve Banks A B C D Ans lO 0 102 B C D Ans They are privately owned and privately controlled central banks whose basic goal is to provide an ample and orderly market for US Treasury securities They are privately owned and publicly controlled central banks whose basic function is to minimize the risks in commercial banking in order to make it a reasonably profitable industry They are privately owned and publicly controlled central banks whose basic goal is to control the money supply and interest rates in promoting the general economic welfare They are privately owned and publicly controlled central banks whose basic goal is to earn profits for their owners The seven members of the Board of Governors of the Federal Reserve System are A appointed by the President with the confirmation of the Senate elected by Congress from a slate of nominees provided by the President appointed by the Senate Finance Committee appointed by the presidents of the twelve Federal Reserve Banks Credits cards are the fastest growing component of the M 1 money suppl nearmonies that are part of the MZM money supply but not part of the M2 or Ml money supplies not money officially defined also known as time deposits The Financial Services Modernization Act of 1999 A set limits on the fees that banks can charge for automatic teller machine ATM withdrawals established a new dollar coin that will replace the dollar bill in 2008 permitted banks thrifts pension companies and securities firms to merge and to sell each other39s products outlawed quotpayday loansquot that are advanced against forthcoming payroll checks 26 What are the seven functions of the Federal Reserve System Which one is most important 6 What is the difference between the M1 and M2 de nitions of the money supply
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