Test Questions Chapter 18.docx - Chapter 18 1 Which of the...

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Chapter 18 1. Which of the following is true of the Federal Reserve System? The Federal Reserve System is divided into 12 districts. 2. Suppose you transfer $1,000 from your checking account to your savings account. How does this action affect the M1 and M2 money supplies? M1 falls by $1,000 and M2 is unchanged. 3. The Federal Deposit Insurance Corporation (FDIC): was created to reduce the risk of banking by compensating depositors and keeping bank failures from spreading. 4. The Federal Reserve System: was created by the Federal Reserve Act of 1913 to provide more safety to the U.S. banking system. 5. Which of the following organizations in the United States is responsible for the conduct of monetary policy? The Federal Reserve 6. Suppose Alfred got elected as a member of the Board of Governors of the Federal Reserve System. He will hold his post for a period of _____ years. 14 7. The board of governors of the Federal Reserve System is responsible for: controlling the money supply in the United States. 8. The difference between M1 and M2 is given by which of the following? M1 is made up of currency, and money in checkable accounts, whereas M2 contains M1 plus savings deposits and time deposits.
9. Which of the following is a major provision of the Monetary Control Act of 1980? The act increased the authority of the Fed over nonmember depository institutions. 10. Which of the following is a possible drawback of the barter system of exchange?

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