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Exam 14: Money, Banking, and Financial Institutions

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Question 111

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With token money, the face value is greater than the intrinsic value.

A) True
B) False

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Question 112

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How do high rates of inflation affect the acceptability of a nation's currency?

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High rates of inflation reduce the purcha...

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Question 113

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What were the main factors that led to the mortgage default crisis?

Debit card balances are part of money supply M1, but credit card balances are not.

The Federal Deposit Insurance Corporation (FDIC) insures deposits in

The Federal Reserve System is the institution that issues the U.S. paper currency or dollar bills.

Coins in people's pockets and purses are

Subprime mortgage loans are so named because the rates charged are below the prime interest rate.

Currency held in the vault of First National Bank is

Explain the difference between a money-market deposit account and a money-market mutual fund.

What does it mean when economists say that home buyers are "underwater" on their mortgages?

Gold backs the U.S. money supply.

$\begin{array} { | l | c | } \hline \text { Money Market Mutual Fund Balances Held by Businesses } & \$ 100 \\\hline \text { Money Market Mutual Fund Balances Held by Individuals } & 220 \\\hline \text { Currency in Banks } & 10 \\\hline \text { Currency in Circulation } & 60 \\\hline \text { Savings Deposits, Including Money Market Deposit Accounts } & 50 \\\hline \text { Large-denominated ( } \$ 100,000 \text { or more) Time Deposits } & 180 \\\hline \text { Small-denominated (\$100,000 or less) Time Deposits } & 80 \\\hline \text { Checkable Deposits } & 70\\\hline\end{array}$ Refer to the table. The value of the near monies that are part of M2 is

Checkable deposits are included in

The M1 money supply is composed of currency, checkable deposits, and savings deposits.

Approximately how many commercial banks are now operating in the United States?

$\begin{array} { | l | c | } \hline { \text { Item } } & \text { Billlons of Dollars } \\\hline \text { Checkable Deposits } & \$ 597 \\\hline \text { Small Time Deposits } & 818 \\\hline \text { Currency } & 639 \\\hline \text { Money-Market Mutual Funds Held by Businesses } & 1,045 \\\hline \text { Savings Deposits, Including Money-Market Deposit Accounts } & 2,866 \\\hline \text { Money-Market Mutual Funds Held by Individuals } & 979 \\\hline\end{array}$ Refer to the accompanying table. The size of the M2 money supply is

The Federal Reserve System is a bankers' bank and thereby acts as a "lender of last resort" to banks.

The Federal Reserve Banks are owned by the

In the United States, all money is essentially the debt of the Fed, commercial banks, and thrift institutions.