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.