As a "lender of last resort" the Fed  :protects the deposits of $100,000 or less in all commercial banks in the country .bails out any depository institution it has decided should not be allowed to fail .bails out any corporation the government has decided should not fail .is obligated to bail out any depository institution in the country that is in financial difficulty

In a less-developed economy, cattle is widely accepted as payment for goods and services. Nearly all goods and services are priced in terms of cattle; however, cows vary in quality, become less valuable with age, and are difficult to move over long distances. Which of the following functions of money do cattle provide? Select the two correct answers.     portability   uniformity   medium of exchange   unit of account   store of value

Wide Bank is a depository institution that suffers from a lack of liquidity. Would the bank be eligible for primary credit? No, because only financially strong institutions with ample capital are allowed to borrow from the Fed in primary credit. Yes, because depository institutions that had exhausted all of their other sources of funds can borrow money at the discount window in primary credit. Which of the following is one of the causes of the credit crunch of 2007? Primary credit The "stigma effect" Secondary credit Seasonal credit

Federal funds are Loans by the Fed Deposits in the Fed Loans between banks Both (a) and (b) Both (b) and (c)

The Federal Deposit Insurance Corporation is at least partly to credit for which of the following? A) Lower taxes and government spending B) Increased interest rates for savers C) Increased interest rates for borrowers D) Reduced bank runs

The main functions of the financial system include: Provide a means of making payments. Prepare to sacrifice some income to avoid uncertainty. Assist borrowing and lending. All of the above

Which of the following is classified as a bank function? Acting as an intermediary Acting as a lender of last resort Providing liquidity Diversifying risk Diversifying liquidity

Money serves three functions in the economy: medium of exchange, unit of account, and store of value. Which of the following statements describes how inflation affects the ability of money to serve as a unit of account? Check all that apply. Inflation erodes money's purchasing power. In some countries with hyperinflation, prices are posted in terms of U.S. dollars rather than the local currency, even though the local currency is still used to purchase the good. Inflation causes menu costs.

An open-market purchase of government securities by the Fed will: Multiple Choice   increase bank reserves, and the money supply will increase.   decrease bank reserves, and the money supply will increase.   increase bank reserves, and the money supply will decrease.   decrease bank reserves, and the money supply will decrease.

Prior to 2008, the Federal Reserve did not pay interest on reserves held by banks at the Federal Reserve. Many analysts argued that the requirement to hold reserves placed a tax on banks. How would you measure the tax? discount rate Fed funds rate (FFR) interest rate on excess reserves (IROER) the difference between the fed funds rate (FFR) and the interest rate on reserves (IOR)