16. The major earning asset of bank is: a. checkable deposits b. loans c. Certif
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16. The major earning asset of bank is: a. checkable deposits b. loans c. Certificate of Deposits (CDs) d. NOW account 17. Most of the money in our economy today is: a. Checks b. Cash c. Coins d. ATM 18. When we speak of expressing the prices of goods in an economy, we are speaking of money's function as: a. a medium o exchange b. a unit of account c. a store of value d. a standard of deferred payment 19. Bank money is primarily provided by: a. the Federal Reserve b. commercial banks c. Fidelity d. Congress 20. The simple deposit multiplier assumes that: a. b. c. d. all money is deposited in checking account individuals do not hold cash all of the above none of the above 21. The Federal Reserve System's Board of Governors a. b. c. d. is appointed by the Congress is appointed by the President is elected by the public has no power in macroeconomic policyExplanation / Answer
16) - b) - The major earning asset of bank is loans
In case of checkable deposits, certificate of deposits (CDs), NOW account, the bank has to pay the money or interest and thus, they are liability for banks. Whereas, in case of loans given, bank receives the interests on loans and thus, they are asset for banks.
17) - b) - Most of the money in our economy today is in cash.
Check and ATM are not form of money rather just a medium for money withdrawal. Coins usage is very limited as compared to cash.
18) - a) - a medium of exchange
Various prices of goods helps in easy exchange as compared to barter system.
19) - a) - Bank money is primarily provided by the Federal Reserve.
In every country, Central Bank provided the banks with the supply of money and majorly monetary policy making body of the country. In U.S., the Federal Reserve System is the central bank.
20) - c) - all of the above
The simple deposit multiplier assumes that bank hold no excess reserve (thus, money is deposited in checking account) and individuals do not hold cash.
21) - b) - The Federal Reserve System's Board of Governors is appointed by the President.
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