Money & Banking Practice Quiz

"The Fed" refers to the....

• Federal Bureau of Investigation
• Federal Government
• Federal Reserve System
• Federal Income Tax

Fee charged to borrow money

• Inflation
• Interest
• Discount rate
• Reserve requirement

What does Inflation do to the value of money?

• Makes it go up.
• Makes it go down.
• Makes it stay the same.

In a recession, the Fed would likely

• Increase the supply of money in the economy
• Decrease the supply of the money in the economy

Coins and paper bills make up the _____ of the United States.

• barter

• currency

• debt

The _____ is the central bank of the United States.

• Financial institutions

• Federal Reserve System

• District Banks

Anything that's accepted in exchange for goods & services.

• Currency

• Money

• Liquidity

• Deferred Payment

A certain % of checkable deposits that banks keep on reserve.

• Reserve Requirement

• Excess Reserves

• Savings

• Fractional Reserve

What is the primary function of the Federal Reserve?

• To collect taxes

• To insure deposits

• To manage the nation's money supply

• To provide loans to the public

What happens when there is a decrease in the reserve requirement?

• Banks have less money to lend.

• Banks have more money to lend.

• The value of the currency increases.

• The interest rates automatically increase.