This quiz works best with JavaScript enabled. Home > Money And Banking > Money And Banking – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Money And Banking Quiz 5 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Why does the Federal Reserve alter monetary policy? A) To regulate the banking industry. B) To provide services to member banks. C) To enable banks to clear checks. D) To lessen the effect of natural business cycles. Show Answer Correct Answer: D) To lessen the effect of natural business cycles. 2. A stock split is most likely to occur when A) A company is losing money. B) Stockholders demand higher dividends. C) The price of a stock becomes too high. D) The stock market as a whole is doing poorly. Show Answer Correct Answer: C) The price of a stock becomes too high. 3. An example of equity is A) A treasury bond. B) A share of stock. C) A treasury bill. D) A long-term certificate of deposit. Show Answer Correct Answer: B) A share of stock. 4. Money is demanded for speculative motives in order to A) Generate profit from the change in price of bonds and speculated change in interest. B) Overcome any uncertainty in the price of goods and services. C) Purchase goods and services that are difficult to obtain in the market. D) Avoid the risk of a drop in the value of money. Show Answer Correct Answer: A) Generate profit from the change in price of bonds and speculated change in interest. 5. In case of a bank failure, customer deposits up to $ 250, 000 per account are guaranteed by the A) Federal Reserve Bank. B) Federal Reserve Board. C) 2nd Bank of the United States. D) Federal Deposit Insurance Corporation. Show Answer Correct Answer: D) Federal Deposit Insurance Corporation. 6. If a customer deposits $ 10, 000 when the reserve ratio (rr) is 0.2. That bank may A) Loan out $ 10, 000. B) Loan out $ 9, 000. C) Loan out $ 8, 000. D) Loan out $ 2, 000. Show Answer Correct Answer: C) Loan out $ 8, 000. 7. What is a mortgage used to purchase? A) Car. B) Real estate. C) College tuition. D) Business expenses. Show Answer Correct Answer: B) Real estate. 8. Money goes from the FED to the bondholder and the bondholder then spends or invests it. The net result A) The money supply disappears from circulation. B) The money supply decreases. C) Money is added to circulation. D) The money supply increases. E) 3 and 4. Show Answer Correct Answer: E) 3 and 4. 9. One way in which the Federal Reserve works to change the United States money supply is by changing the A) Discount rate. B) Velocity of money. C) Price level. D) Number of banks in operation. Show Answer Correct Answer: A) Discount rate. 10. Penny is an artist, and John is a carpenter. Penny agrees to paint a portrait of John's family in exchange for a handmade table created by John. How do Penny and John pay for their goods in their transaction? A) Using a store of value. B) Through credit. C) Through bartering. D) With currency. Show Answer Correct Answer: C) Through bartering. 11. Why would a person invest in junk bonds? A) He does not know anything about investment. B) Junk bonds can pay very high interest rates. C) Most junk bonds have low interests rates. D) Junk bonds have high bond ratings. Show Answer Correct Answer: B) Junk bonds can pay very high interest rates. 12. Advocates of supply-side economics argue that spending by the federal government ..... . A) Can crash the economy completely. B) Slows economic growth. C) Has no effect on economic growth. D) Helps stimulate economic growth. Show Answer Correct Answer: B) Slows economic growth. 13. All the following are characteristics of money EXCEPT A) Durability. B) Uniformity. C) Divisibility. D) Accountability. Show Answer Correct Answer: D) Accountability. 14. Which of the following refers to the payee's signature on the back of the check? A) Signature card. B) Check register. C) Endorsement. D) Bank statement. Show Answer Correct Answer: C) Endorsement. 15. 'Money enables people to borrow and lend'. Which function of money does this describe? A) Measure of value. B) Medium of exchange. C) Standard for deferred payment. D) Store of value. Show Answer Correct Answer: C) Standard for deferred payment. 16. The currency the Federal Reserve puts into circulation is called ..... or is paper money. A) Federal Paper. B) Federal Reserved Notes. C) Federal Coins. D) Federal Cash. Show Answer Correct Answer: B) Federal Reserved Notes. 17. The item used must have a standard appearance so that it is recognised and seen to represent an agreed fixed amount A) Durable. B) Acceptable. C) Uniform. D) Scarce. Show Answer Correct Answer: C) Uniform. 18. Which is the most liquid measure of the money supply? A) M4. B) M3. C) M2. D) M1. Show Answer Correct Answer: D) M1. 19. Credit control means- A) Contraction of credit only. B) Extension of credit only. C) Extension and contraction of money supply. D) None of these. Show Answer Correct Answer: C) Extension and contraction of money supply. 20. Money supply is ..... concept A) Stock. B) Flow. C) Variable. D) All the above. Show Answer Correct Answer: A) Stock. ← PreviousNext →Related QuizzesMoney And Banking Quiz 1Money And Banking Quiz 2Money And Banking Quiz 3Money And Banking Quiz 4Money And Banking Quiz 6Money And Banking Quiz 7Money And Banking Quiz 8Money And Banking Quiz 9Money And Banking Quiz 10Money And Banking Quiz 11 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books