This quiz works best with JavaScript enabled. Home > Money And Banking > Money And Banking – Quiz 28 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Money And Banking Quiz 28 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Mortimer transfers $ 100 from his savings account to his checking account. The effect on the money supply will be A) M1 increases, M2 decreases, M3 is unchanged. B) M1, M2, M3 all increase. C) M1 will increase, M2 and M3 are unchanged. D) M1 will increase, M2 will increase, M3 falls. Show Answer Correct Answer: C) M1 will increase, M2 and M3 are unchanged. 2. What loan do you borrow for buying a house? A) Commercial. B) Line of credit. C) Mortgage. D) Indivdiual. Show Answer Correct Answer: C) Mortgage. 3. How useful cacao beans might be as money today. / not durable enough to retain value over time. A) Medium of exchange. B) Standard of value. C) Store of value. D) None of above. Show Answer Correct Answer: C) Store of value. 4. If the Fed set the reserve requirement at 20%, the money multiplier would be A) 5. B) 4. C) 10. D) Indeterminant. Show Answer Correct Answer: A) 5. 5. Commercial banks can create money by A) Transferring depositors' accounts at the Federal Reserve for conversion to cash. B) Lending excess reserves to customers. C) Maintaining a 100% reserve requirement. D) Buying Treasury bills from the Federal Reserve. Show Answer Correct Answer: B) Lending excess reserves to customers. 6. The amount we take out as a loan A) Principal. B) Interest. C) Portfolio. D) Stock. Show Answer Correct Answer: A) Principal. 7. You have invested $ 500 at 9 percent interest. According to the Rule of 72, how soon will the money double in value? (72/r = time) A) 4 years. B) 6 years. C) 8 years. D) 12 years. Show Answer Correct Answer: C) 8 years. 8. An important job of the Federal Reserve is to A) Protect the nation. B) Manage and control the money supply. C) Make sure all goods are safe. D) All of the above. Show Answer Correct Answer: B) Manage and control the money supply. 9. To finance a new police station, a local government is most likely to issue a A) Junk bond. B) Treasury bond. C) Municipal bond. D) Money market bond. Show Answer Correct Answer: C) Municipal bond. 10. You ..... your account when you write checks for more money than you ahve in the bank. A) Debit card. B) Service fee. C) Overdraw. D) Deposit. Show Answer Correct Answer: C) Overdraw. 11. When describing a function of money, what does 'a store of value' mean? A) Money is used to exchange for goods and services. B) Money circulates around the economy over time. C) Money may be kept for future spending. D) Money does not lose its value over time. Show Answer Correct Answer: C) Money may be kept for future spending. 12. Demand deposit created by the commercial bank are called A) High powered money. B) Money. C) Bank money. D) Time deposit. Show Answer Correct Answer: C) Bank money. 13. Why was the Federal Reserve System created? A) To serve as the nation's first true central bank. B) All nations are required to join. C) All state-charted banks were eligible to join. D) Bank's bank is the Federal Reserve. Show Answer Correct Answer: A) To serve as the nation's first true central bank. 14. The act of evaluating and setting the value of property A) Overdraft. B) Appraisal. C) Amortization. D) Principal. Show Answer Correct Answer: B) Appraisal. 15. To become a member of the Fed A) Banks buy shares of stock. B) Banks ask the government permission. C) Banks have to have a minimum of 1000 branches around the country. D) Banks have to have at least 1 million customers. Show Answer Correct Answer: A) Banks buy shares of stock. 16. This is when the FED restricts the growth of the money supply, which drives up the interest rates and makes credit hard to get. A) Monetary Policy. B) FED Action. C) Easy money policy. D) Tight money policy. Show Answer Correct Answer: D) Tight money policy. 17. Which aggregate is the most liquid? A) M1. B) M2. C) M3. D) M4. Show Answer Correct Answer: A) M1. 18. Each of the following RBA actions will contract the money supply except ..... A) Raise the reserve ratio. B) Raise the discount rate. C) Raise the Federal Funds rate. D) Buy bonds. Show Answer Correct Answer: D) Buy bonds. 19. A detailed report of an individual's credit history, used by a lender to determine a loan applicant's creditworthiness. A) Credit score. B) Credit report. C) Credit card. D) Debit card. Show Answer Correct Answer: B) Credit report. 20. Our bank for banks A) Federal Reserve Bank. B) Fractional Reserve Banking. C) Monetary Policy. D) Fiscal Policy. Show Answer Correct Answer: A) Federal Reserve Bank. ← PreviousNext →Related QuizzesMoney And Banking Quiz 1Money And Banking Quiz 2Money And Banking Quiz 3Money And Banking Quiz 4Money And Banking Quiz 5Money And Banking Quiz 6Money And Banking Quiz 7Money And Banking Quiz 8Money And Banking Quiz 9Money And Banking Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books