1. Money, banking, and financial institution
Chapter 14
Money, banking, and financial institution

2. Taylor Economics – Chapter 14
The principal advantage money has over barter is its function as:
A store of value
A medium of exchange
Unit of account
Debt
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

3. Taylor Economics – Chapter 14
The principal advantage money has over barter is its function as:
A store of value
A medium of exchange
Unit of account
Debt
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

4. Taylor Economics – Chapter 14
2. Securitization refers to:
Buying and selling securities.
Insurance against potential losses due to defaults.
Bundling loans, mortgages, and corporate bonds into new securities.
All of the above.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

5. Taylor Economics – Chapter 14
2. Securitization refers to:
Buying and selling securities.
Insurance against potential losses due to defaults.
Bundling loans, mortgages, and corporate bonds into new securities.
All of the above.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

6. Taylor Economics – Chapter 14
3. If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as:
a medium of exchange.
a store of value.
a unit of account.
an economic investment.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

7. Taylor Economics – Chapter 14
3. If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as:
a medium of exchange.
a store of value.
a unit of account.
an economic investment.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

8. Taylor Economics – Chapter 14
4. To say that coins are “token money” means that:
their face value is less than their intrinsic value.
their face value is greater than their intrinsic value.
their face value is equal to their intrinsic value.
they are not legal tender.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

9. Taylor Economics – Chapter 14
4. To say that coins are “token money” means that:
their face value is less than their intrinsic value.
their face value is greater than their intrinsic value.
their face value is equal to their intrinsic value.
they are not legal tender.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

10. Taylor Economics – Chapter 14
5. The purchasing power of money and the price level vary:
inversely.
directly during recessions, but inversely during inflations.
directly, but not proportionately.
directly and proportionately.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

11. Taylor Economics – Chapter 14
5. The purchasing power of money and the price level vary:
inversely.
directly during recessions, but inversely during inflations.
directly, but not proportionately.
directly and proportionately.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

12. Taylor Economics – Chapter 14
6. Stabilizing a nation’s price level and the purchasing power of its money can be achieved:
only with fiscal policy.
only with monetary policy.
with both fiscal and monetary policy.
with neither fiscal nor monetary policy.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

13. Taylor Economics – Chapter 14
6. Stabilizing a nation’s price level and the purchasing power of its money can be achieved:
only with fiscal policy.
only with monetary policy.
with both fiscal and monetary policy.
with neither fiscal nor monetary policy.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

14. Taylor Economics – Chapter 14
7.  The basic policy-making body in the U.S. banking system is the:
Federal Open Market Committee (FOMC).
Board of Governors of the Federal Reserve.
Federal Monetary Authority.
Council of Economic Advisers.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

15. Taylor Economics – Chapter 14
7.  The basic policy-making body in the U.S. banking system is the:
Federal Open Market Committee (FOMC).
Board of Governors of the Federal Reserve.
Federal Monetary Authority.
Council of Economic Advisers.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

16. Taylor Economics – Chapter 14
8. The Federal Open Market Committee (FOMC) is made up of:
the seven members of the Board of Governors along with the president of the New York Federal Reserve Bank.
the seven members of the Board of Governors of the Federal Reserve System along with the three members of the Council of Economic Advisers.
the seven members of the Board of Governors of the Federal Reserve System along with the president of the New York Federal Reserve Bank and four other Federal Reserve Banks presidents on a rotating basis.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

17. Taylor Economics – Chapter 14
8. The Federal Open Market Committee (FOMC) is made up of:
the seven members of the Board of Governors along with the president of the New York Federal Reserve Bank.
the seven members of the Board of Governors of the Federal Reserve System along with the three members of the Council of Economic Advisers.
the seven members of the Board of Governors of the Federal Reserve System along with the president of the New York Federal Reserve Bank and four other Federal Reserve Banks presidents on a rotating basis.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

18. Taylor Economics – Chapter 14
9. Currency in circulation is part of:
M1 only.
M2 only.
neither M1 nor M2.
both M1 and M2.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

19. Taylor Economics – Chapter 14
9. Currency in circulation is part of:
M1 only.
M2 only.
neither M1 nor M2.
both M1 and M2.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

20. Taylor Economics – Chapter 14
10. Moral hazard created during the financial crisis occurred because:
Federal government bailed out large firms.
Federal Reserve took a variety of actions as a lender of last resort.
A and B
Companies created collateralized default swaps.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

21. Taylor Economics – Chapter 14
10. Moral hazard created during the financial crisis occurred because:
Federal government bailed out large firms.
Federal Reserve took a variety of actions as a lender of last resort.
A and B
Companies created collateralized default swaps.
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.