Money Test:   Disc 5 & 6

Fill in the blanks.

1. According to Article _______ of the Constitution, Congress was given the power to coin money.
2. Before 1971, our ___________ was redeemable for face value in gold and silver.
3. A Federal Reserve Note is what we call a  _______________________________________ .
4. The Federal Reserve Act was passed in ________________.
5. The U. S. government borrows money by issuing  ________________________ and sells them to the Federal Reserve Bank.
6. The U.S. government then gets a ___________________________ in its place.
7. If the reserve requirement is 10%, a the bank can then loan $________________ with $10000 deposited.
( 8-10)  The Federal Reserve Board controls the economy through  8._____________________________,
             9. ____________________________________ ,     and 10.______________________________.


True or False.

1. 20% of our nation's money is in coin and cash. _____________ 
2. All national commercial banks are required by law to be a member of the Federal Reserve  System. _________
3. The fraction reserve system is actually is a way to "pyramid" the bank's money. _________
4. The Federal Reserve Bank is a private bank corporation that has stockholders. _________
5. The stockholders of the Federal Reserve Bank have made millions of  tax free money  for over a century. ________
6. The Federal Reserve Bank buys or sells treasury bills from the banks by creating money out of nothing. __________ 
7. The Federal Reserve Note is a promissory note not tied to anything except the full faith and credit of the people. __________
8. Today the  "Reserve" requirement of the Federal Reserve stands at less then 15%. ___________
9. If every bank customer demanded their deposited money, the banks couldn't deliver. ___________
10. The Federal Reserve Banking System was sold to the American people as a cure to the economic boom & bust cycles.______

Answer the following questions.

1. What is fractional reserve banking? _______________________________________________________________________
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2. Is the following statement true or false? Explain. The banks make money created out of nothing. ________________________
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