Money and Banking
What are the three functions of money? Be able to describe/recognize each.
What is M1? Generally, what types of balances are
included in M1? Specifically, what items are included in M1? What is the
largest component of M1?
What items are included in
M2?
What is a money market
deposit account?
Are credit cards money? Debit cards?
Why or why not?
It is said that all our
money today is “debt” money.
Explain! Debt of whom?
What “backs” money in the
U.S. today?
If money is not backed by
gold or some other
precious material, what
gives it it’s value?
What is the relationship
between the value of the
dollar and the price level
in the economy?
What is meant by the concept
“demand for money” ?
What factors determine the
quantity of money that the public desires to hold?
Assume that there is a
surplus of money in the economy—that there is more money available than people
desire to hold. How would the economy
react to such a condition? Explain the
process.
What are the major functions
of the Federal Reserve?
Relative to the Fed’s Board
of Governors:
How does one become a member?
How many members?
How long is the term on the Board?
What are the restrictions on membership?
Relative to the Federal Open
Market Committee:
Who are the members?
What are its functions?
John Dapper Doe has a new Mercedes. He says that his new set of wheels is worth $88,000. This is an example of money serving as:
a) a store of value
b) a unit of accounting
c) a medium of exchange
d) a standard of deferred
payments
e) a barter item
Which of the following would
be included in M1?
a) saving account balances
b) money market mutual funds
balances
c) CD balances
d) money market deposit account
balances
e) NOW account balances.