Chapter 10

Why are funds in checking accounts called demand deposits?

• they are not liquid

• they are usually in great demand

• they are available whenever the depositor demands them by writing a check

• they are held without interest by the bank

The money supply of the United States is made up of which of the following?

• M1

• M1 and parts of M2

• all the money available in the economy plus money that the country could borrow

• all the money available in the economy

The largest source of income for banks is the ___________ they receive from customers who have taken loans.

• contrast

• joining

• interest

• disinterest

Storing Money

• Bank Service

• Interest

• joint account

• none of these

Which of the following is not a banking service?

• Credit Cards

• Loans

• Interest

• Mortgages

_______ consists of assets that have liquidity, or the ability to be used as, or easily converted into, cash.

• M1

• M2

• M3

• M4

______consists of all of the assets in M1, plus deposits in savings accounts and money market mutual funds.

• M1

• M2

• M3

• M4

During the Free Banking Era between 1837 and 1863, banking in the United States was dominated by which of the following?

• state-chartered banks

• savings and loans banks

• The Bank of the United States

• small, independent banks with no charters

After the Civil War, the National Banking Acts gave the federal government the power to do all of the following EXCEPT:

• charter banks

• require banks to hold adequate gold and silver reserves

• insure banks against failure

• issue a single national currency

The Federal Reserve Act of 1913 created the _____________________.

• Federal Reserve System

• Federalist

• FDIC

• Frankenstein