Multiple choice

1. The U.S. central bank is a financial institution that: 
has the sole right to accept deposits and make loans.
has the sole right to issue currency, commonly referred to as notes.
sets borrowing and lending in a country.
determines what assets will back a currency.

2. Small-denomination time deposits are included in: 
M1.
M2.
traveler's checks.
checking accounts.

3. The amount of money ultimately created per dollar deposited when people hold cash is the: 
money multiplier.
excess reserve ratio.
required reserve ratio.
simple money multiplier.

4. The interest rate is the price paid for the use of a: 
real liability.
real asset.
financial liability.
financial asset.