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eco ch 14

True/False
Indicate whether the sentence or statement is true or false.
 

1. 

Congress established the Federal Reserve System to control the amount of money in circulation.
 

2. 

The Federal Deposit Insurance Corporation (FDIC) protects individual depositors in case of a bank failure.
 

3. 

Overdraft checking allows a customer to write a check for more money than exists in his or her account.
 

4. 

The Electronic Funds Transfer Act regulates service charges across the country.
 

5. 

Customers who use automated teller machines have no legal protection against computer mistakes.
 

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
 

6. 

A seller accepting money for a service reflects the use of money as
a.
a medium of exchange.
c.
a unit of accounting.
b.
barter.
d.
a store of value.
 

7. 

Money that is a measure of value functions as
a.
a medium of exchange.
c.
barter.
b.
a store of value.
d.
a unit of accounting.
 

8. 

Placing money in a checking account is an example of using money as
a.
barter.
c.
a medium of exchange.
b.
a store of value.
d.
a unit of accounting.
 

9. 

Money that is durable
a.
can withstand wear and tear.
c.
can easily be divided into small parts.
b.
can be carried around easily.
d.
is accepted by those who use it.
 

10. 

All money in the United States today is
a.
commodity money.
c.
fiat money.
b.
representative money.
d.
barter.
 

11. 

The phrase "not worth a Continental" referred to money issued during the
a.
Revolutionary War.
c.
Civil War.
b.
War of 1812.
d.
Great Depression.
 

12. 

In case of a bank failure, the funds of individual depositors are protected by the
a.
Federal Deposit Insurance Corporation.
b.
Truth in Lending Act.
c.
Equal Credit Opportunity Act.
d.
Electronic Funds Transfer Act.
 

13. 

Which of the following may vary according to each state's banking laws?
a.
monetary standard
c.
basic unit of currency
b.
service charges
d.
rights of consumers
 

14. 

Electronic funds transfer was made possible by
a.
the savings and loan industry.
c.
overdraft checking.
b.
Federal Reserve notes.
d.
the use of the computer.
 

15. 

One drawback to electronic banking is lack of
a.
convenience.
c.
service.
b.
privacy.
d.
legal protection.
 

16. 

Today money consists of
a.
only checking and savings deposits.
b.
currency, checking and savings deposits, and investments.
c.
only investments in stocks.
d.
only currency.
 

17. 

Most U.S. currency today is in the form of
a.
gold and silver.
c.
coins.
b.
Federal Reserve notes.
d.
United States notes.
 

18. 

Which of the following describes a debit card?
a.
type of loan
b.
defers transactions that involve the use of money
c.
involves paying interest if a balance is not paid off
d.
automatically withdraws money from a checkable account
 

19. 

Which of the following are considered near moneys?
a.
debit cards
c.
stocks
b.
checking accounts
d.
savings accounts
 

20. 

The M1 definition of money supply does not include
a.
currency.
c.
near moneys.
b.
traveler's checks.
d.
checking account deposits.
 

Completion
Complete each sentence or statement.
 

21. 

Using money as a ____________________ provides a way of comparing the values of various items.
 

 

22. 

Coins are more ____________________ than paper money.
 

 

23. 

Money is called a ____________________ because a seller will accept it for a good or service.
 

 

24. 

To be able to buy goods and services at a later time, a person uses money as a ____________________.
 

 

25. 

Paper money is more ____________________ than large amounts of coins.
 

 

26. 

____________________ are assets that can be turned into currency relatively easily without the risk of loss of value.
 

 

27. 

A checking account is an example of a ____________________.
 

 

28. 

Mutual savings banks, savings and loan associations, and credit unions are ____________________.
 

 

29. 

The use of a ____________________ is similar to the use of a checkable account.
 

 

30. 

____________________ includes moneys that can be spent immediately as well as near moneys, money market mutual fund balances, and other specialized account balances.
 

 

Matching
 
 
Match each item with the correct statement below.
a.
money
b.
medium of exchange
c.
barter
d.
commodity money
e.
fiat money
 

31. 

use of money in exchange for goods or services
 

32. 

money that has value because the government has established it as acceptable for payment of debts
 

33. 

exchange of goods and services for other goods and services
 

34. 

anything customarily used as a medium of exchange, a unit of accounting, or a store of value
 

35. 

mediums of exchange that have value as a good, aside from their value as money
 
 
Match each item with the correct statement below.
a.
overdraft checking
b.
electronic funds transfer
c.
automated teller machine
d.
service charges
e.
monetary standard
 

36. 

unit that allows customers to do their banking without the help of a teller
 

37. 

way in which a nation assigns value to money
 

38. 

account that allows a customer to write a check for more money than exists in the account
 

39. 

system of putting banking functions onto computers
 

40. 

fees that banks charge on checking accounts
 
 
Match each item with the correct statement below.
a.
checking account
b.
thrift institutions
c.
debit card
d.
near moneys
e.
M1
 

41. 

assets that can be turned into money relatively easily
 

42. 

narrowest definition of money supply
 

43. 

account in which deposited money can be withdrawn at any time by writing a check
 

44. 

credit device used to make cashless purchases
 

45. 

mutual savings banks, S&Ls, and credit unions that offer many of the same services as commercial banks
 



 
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