Econ 321 Exam 3 Review 2022/2023 # 59
questions and answers- all correct.
quiz 1: Identify which of the following is not one of the five core principles of money and
banking. - -Stability creates risk
-quiz 1: Studying money and banking through five core principles is helpful because: - -
money and banking can undergo drastic changes overtime, but the five principles do
not.
-quiz 1: Which of the following statements best describes financial markets? - -
Financial markets lower the cost and increase the speed of buying and selling financial
instruments.
-quiz 1: The statement "risk requires compensation" implies that people: - -will only
accept risk when they are rewarded for doing so.
-quiz 1: Identify which item is not one of the six parts of the financial system. - -Credit
cards
-quiz 1: The largest regulatory change in U.S. financial markets since 1930 is known as:
- -the Dodd-Frank Act.
-quiz 1: U.S. monetary policy is best described as: - -aimed at keeping inflation low and
stable and growth high and stable.
-quiz 1: In 2010, regulators of many nations agreed on a major update of internationally
active banks known as: - -Basel III.
-quiz 1: The central bank of the United States is: - -the Federal Reserve System
-quiz 2: Which of the following would not be considered a characteristic of money? - -It
must have intrinsic value.
-quiz 2: The amount of currency in the hands of the public is approximately what
percentage of M1? - -45%
-quiz 2: M1 is: - -about 17% of GDP.
-quiz 2: Which of the following assets is the most liquid? - -Demand deposits
-quiz 2: Money as a means of payment refers to: - -anything that is generally accepted
as payment for goods and services.
-quiz 2: Which of the following assets is least liquid? - -Art
, -quiz 2: An advantage that money has over other assets is that it: - -has lower
transaction costs to use as a means of payment than other assets.
-quiz 2: The value of fiat money: - -comes from government decree.
-quiz 2: As a result of "Check 21—The Check Clearing for the 21st Century Act": - -
banks no longer have to ship paper checks to complete the process of check clearing.
-quiz 2: Which of the following is not an example of bartering? - -Mary paying for her
new shoes with her credit card.
-quiz 3: The Federal Reserve is divided into how many geographical districts? - -12
-quiz 3: According to Orr... - -The Fed creates reserves, but banks create money
-quiz 3: If the required reserve ratio is 5%, and a bank accepts a deposit of $1000, what
is the amount of loans that you can make? - -$950
($1000 x .05 = 50, 1000-50=950)
-quiz 3: What is the stability of the banking and payments system crucial to our
economy? - -Everyone depends on markets, and markets function much better with
money
-quiz 3: Under a reserves system of banking, the way banks actually create money today
is by - -taking deposits and making loans
-quiz 3: According to Orr, what was the big problem with using gold as the backing for
currency in the US - -the supply of gold was unstable, so that more money than
necessary was created during the gold rushes and less money than necessary was
created at other times
-quiz 3: According to Orr, money exists only if - -we believe in it
-quiz 3: Who is responsible for setting the Federal Funds Rate - the banks charge to
borrow reserves from one another? - -The Federal Open Market Committee (FOMC)
-quiz 3: The President and Congress have - -authority over who is appointed to be the
Chair of the Board of Governors and other members of the Board, and some other posts,
and very little of that
-quiz 3: What is the real purpose of raising or lowering the Fed Funds or Discount
Rates? - -To raise or lower other interest rates that directly affect economic activity
-quiz 4: Why are the genuine barter based societies so rare? - -> Everyone would be
posed to strike at everyone else, but would never do so
questions and answers- all correct.
quiz 1: Identify which of the following is not one of the five core principles of money and
banking. - -Stability creates risk
-quiz 1: Studying money and banking through five core principles is helpful because: - -
money and banking can undergo drastic changes overtime, but the five principles do
not.
-quiz 1: Which of the following statements best describes financial markets? - -
Financial markets lower the cost and increase the speed of buying and selling financial
instruments.
-quiz 1: The statement "risk requires compensation" implies that people: - -will only
accept risk when they are rewarded for doing so.
-quiz 1: Identify which item is not one of the six parts of the financial system. - -Credit
cards
-quiz 1: The largest regulatory change in U.S. financial markets since 1930 is known as:
- -the Dodd-Frank Act.
-quiz 1: U.S. monetary policy is best described as: - -aimed at keeping inflation low and
stable and growth high and stable.
-quiz 1: In 2010, regulators of many nations agreed on a major update of internationally
active banks known as: - -Basel III.
-quiz 1: The central bank of the United States is: - -the Federal Reserve System
-quiz 2: Which of the following would not be considered a characteristic of money? - -It
must have intrinsic value.
-quiz 2: The amount of currency in the hands of the public is approximately what
percentage of M1? - -45%
-quiz 2: M1 is: - -about 17% of GDP.
-quiz 2: Which of the following assets is the most liquid? - -Demand deposits
-quiz 2: Money as a means of payment refers to: - -anything that is generally accepted
as payment for goods and services.
-quiz 2: Which of the following assets is least liquid? - -Art
, -quiz 2: An advantage that money has over other assets is that it: - -has lower
transaction costs to use as a means of payment than other assets.
-quiz 2: The value of fiat money: - -comes from government decree.
-quiz 2: As a result of "Check 21—The Check Clearing for the 21st Century Act": - -
banks no longer have to ship paper checks to complete the process of check clearing.
-quiz 2: Which of the following is not an example of bartering? - -Mary paying for her
new shoes with her credit card.
-quiz 3: The Federal Reserve is divided into how many geographical districts? - -12
-quiz 3: According to Orr... - -The Fed creates reserves, but banks create money
-quiz 3: If the required reserve ratio is 5%, and a bank accepts a deposit of $1000, what
is the amount of loans that you can make? - -$950
($1000 x .05 = 50, 1000-50=950)
-quiz 3: What is the stability of the banking and payments system crucial to our
economy? - -Everyone depends on markets, and markets function much better with
money
-quiz 3: Under a reserves system of banking, the way banks actually create money today
is by - -taking deposits and making loans
-quiz 3: According to Orr, what was the big problem with using gold as the backing for
currency in the US - -the supply of gold was unstable, so that more money than
necessary was created during the gold rushes and less money than necessary was
created at other times
-quiz 3: According to Orr, money exists only if - -we believe in it
-quiz 3: Who is responsible for setting the Federal Funds Rate - the banks charge to
borrow reserves from one another? - -The Federal Open Market Committee (FOMC)
-quiz 3: The President and Congress have - -authority over who is appointed to be the
Chair of the Board of Governors and other members of the Board, and some other posts,
and very little of that
-quiz 3: What is the real purpose of raising or lowering the Fed Funds or Discount
Rates? - -To raise or lower other interest rates that directly affect economic activity
-quiz 4: Why are the genuine barter based societies so rare? - -> Everyone would be
posed to strike at everyone else, but would never do so
