Money and Banking Functions Quiz
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Money and Banking Functions Quiz

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@StimulativeOxygen

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Questions and Answers

What is the primary function of a central bank?

  • Issuing currency and providing banking services to the government
  • Facilitating international trade and foreign exchange transactions
  • Regulating the money supply and interest rates (correct)
  • Providing loans to small businesses and individuals
  • How does fractional reserve banking work?

  • Banks only lend money to individuals with high credit scores
  • Banks hold a fraction of their deposits as reserves and lend out the rest (correct)
  • Banks are required to maintain 100% of their deposits as reserves
  • Banks lend out more money than they have in reserves
  • What is the role of the Federal Reserve in the U.S. banking system?

  • Issuing currency and managing government budgetary operations
  • Facilitating international trade and exchange rate stability
  • Providing insurance for bank deposits and overseeing consumer protection laws
  • Controlling the money supply and regulating banks to ensure financial stability (correct)
  • What is the purpose of the deposit insurance scheme established by many countries?

    <p>To protect depositors against the loss of their deposits if a bank fails</p> Signup and view all the answers

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