A price tag of $40 on a pair of shoes shows money working as which of its functions?Saylor Academy open textbook Money and Banking, section 3.1 Of Love, Money, and Transactional Efficiency. DSST outline area I (6%), a. Alternative definitions of money
Which measure of the money supply is the sum of currency in circulation and reserve balances held at the Federal Reserve?Federal Reserve Board, "What is the money supply? Is it important?". DSST outline area I (6%), a. Alternative definitions of money
Why is barter less efficient than trade with money?Saylor Academy open textbook Money and Banking, section 3.1 Of Love, Money, and Transactional Efficiency. DSST outline area I (6%), b. Money and other assets
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Commercial banks and other intermediaries 12
A bank asks a borrower to pledge a building that the bank may take if the loan is not repaid. What is the pledged asset called?Saylor Academy open textbook Money and Banking, section 9.4 Credit Risk. DSST outline area II (25%), c. Operation and management of financial markets and intermediaries
A customer of an FDIC-insured bank holds each of these through the bank. Which one is not covered by FDIC deposit insurance?Federal Deposit Insurance Corporation, "Understanding Deposit Insurance". DSST outline area II (25%), d. Deposit insurance
A lender finds that the riskiest borrowers are the keenest to apply for its loans. What is this problem, which arises before any contract is signed, called?Saylor Academy open textbook Money and Banking, section 2.3 Asymmetric Information: The Real Evil. DSST outline area II (25%), c. Operation and management of financial markets and intermediaries
The Herfindahl index measures how concentrated the banking industry is. How is it worked out?Saylor Academy open textbook Money and Banking, section 10.5 Banking Industry Profitability and Structure. DSST outline area II (25%), b. Structure of the banking industry
On a commercial bank's balance sheet, where do customers' deposits appear?Saylor Academy open textbook Money and Banking, section 9.1 The Balance Sheet. DSST outline area II (25%), c. Operation and management of financial markets and intermediaries
The Riegle-Neal Act of 1994 removed many restrictions on what?Federal Reserve History, "Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994". DSST outline area II (25%), a. Regulation of the banking industry
Treasury bills and commercial paper mature in under a year. In which markets do they trade?Saylor Academy open textbook Money and Banking, section 2.5 Financial Markets. DSST outline area II (25%), c. Operation and management of financial markets and intermediaries
What did the Gramm-Leach-Bliley Act of 1999 do?Federal Reserve History, "Financial Services Modernization Act of 1999 (Gramm-Leach-Bliley)". DSST outline area II (25%), a. Regulation of the banking industry
What does a bank's basic gap analysis compare?Saylor Academy open textbook Money and Banking, section 9.5 Interest-Rate Risk. DSST outline area II (25%), c. Operation and management of financial markets and intermediaries
Which 1933 law split commercial banking from investment banking?Federal Reserve History, "Banking Act of 1933 (Glass-Steagall)". DSST outline area II (25%), a. Regulation of the banking industry
Which body did the Dodd-Frank Act of 2010 set up so that regulators could scan the whole financial system for signs of trouble?Federal Reserve History, "Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010". DSST outline area II (25%), a. Regulation of the banking industry
Which of these is one of the two sources of money for the FDIC's Deposit Insurance Fund?Federal Deposit Insurance Corporation, "Understanding Deposit Insurance". DSST outline area II (25%), d. Deposit insurance
Money and macroeconomic activity 10
Aggregate demand is the sum of consumer expenditure, investment, government spending and what else?Saylor Academy open textbook Money and Banking, section 21.1 Aggregate Output and Keynesian Cross Diagrams. DSST outline area III (19%), a. Basic classical and Keynesian economics
In Milton Friedman's modern quantity theory, the demand for real money balances is directly related to what?Saylor Academy open textbook Money and Banking, section 20.2 Friedman's Modern Quantity Theory of Money. DSST outline area III (19%), b. Monetarism and rational expectations
In the aggregate supply and demand model, which of these can cause inflation, meaning a sustained rise in the price level?Saylor Academy open textbook Money and Banking, section 25.1 Empirical Evidence of a Money-Inflation Link. DSST outline area III (19%), c. Money and inflation
In the liquidity preference theory of Keynes, which is one of the three motives for holding money?Saylor Academy open textbook Money and Banking, section 20.1 The Simple Quantity Theory and the Liquidity Preference Theory of Keynes. DSST outline area III (19%), a. Basic classical and Keynesian economics
In the new classical model with rational expectations, what does an expansionary monetary policy do when the public expects it?Saylor Academy open textbook Money and Banking, section 26.1 Rational Expectations. DSST outline area III (19%), b. Monetarism and rational expectations
In the theory of Keynes, how do people respond when interest rates are high?Saylor Academy open textbook Money and Banking, section 20.1 The Simple Quantity Theory and the Liquidity Preference Theory of Keynes. DSST outline area III (19%), a. Basic classical and Keynesian economics
The marginal propensity to consume is 0.8. What is the expenditure multiplier?Saylor Academy open textbook Money and Banking, section 21.1 Aggregate Output and Keynesian Cross Diagrams. DSST outline area III (19%), a. Basic classical and Keynesian economics
What does the simple quantity theory of money assume about the velocity of money?Saylor Academy open textbook Money and Banking, section 20.1 The Simple Quantity Theory and the Liquidity Preference Theory of Keynes. DSST outline area III (19%), a. Basic classical and Keynesian economics
What sets the new Keynesian model apart from the new classical model?Saylor Academy open textbook Money and Banking, section 26.2 New Keynesians. DSST outline area III (19%), b. Monetarism and rational expectations
Which equation is the equation of exchange?Saylor Academy open textbook Money and Banking, section 20.1 The Simple Quantity Theory and the Liquidity Preference Theory of Keynes. DSST outline area III (19%), a. Basic classical and Keynesian economics
Central banking and the Federal Reserve 10
Congress has given the Federal Reserve two goals for monetary policy, often called its dual mandate. What are they?Federal Reserve Board, "What economic goals does the Federal Reserve seek to achieve through its monetary policy?". DSST outline area IV (20%), c. Current monetary management
How long is a full term for a member of the Board of Governors of the Federal Reserve System?Federal Reserve Board, "Structure of the Federal Reserve System". DSST outline area IV (20%), b. Structure and organization
How many regularly scheduled meetings does the Federal Open Market Committee hold in a year?Federal Reserve Board, "Federal Open Market Committee". DSST outline area IV (20%), c. Current monetary management
What did the Banking Act of 1935 do to the Federal Reserve?Federal Reserve History, "Banking Act of 1935". DSST outline area IV (20%), a. Historical and philosophical framework and regulations
What did the Treasury-Fed Accord of March 1951 separate?Federal Reserve History, "The Treasury-Fed Accord". DSST outline area IV (20%), a. Historical and philosophical framework and regulations
What rate of inflation over the longer run does the Federal Open Market Committee judge most consistent with its mandate?Federal Reserve Board, "Why does the Federal Reserve aim for inflation of 2 percent over the longer run?". DSST outline area IV (20%), c. Current monetary management
Which crisis spurred the reform movement that led to the Federal Reserve System?Federal Reserve History, "The Panic of 1907". DSST outline area IV (20%), a. Historical and philosophical framework and regulations
Which Federal Reserve Bank carries out open market operations for the whole System?Saylor Academy open textbook Money and Banking, section 14.2 The Federal Reserve System's Structure. DSST outline area IV (20%), b. Structure and organization
Which president signed the Federal Reserve Act, and in what year?Federal Reserve History, "Federal Reserve Act Signed into Law". DSST outline area IV (20%), a. Historical and philosophical framework and regulations
Who are the twelve voting members of the Federal Open Market Committee?Federal Reserve Board, "Federal Open Market Committee". DSST outline area IV (20%), b. Structure and organization
Monetary policy in the United States 10
A bond pays a nominal interest rate of 5 percent and inflation is expected to be 3 percent. By the Fisher equation, what is the real interest rate?Saylor Academy open textbook Money and Banking, section 4.7 Inflation and Interest Rates. DSST outline area V (20%), c. Interest rates and the impact on money supply
During the Great Recession, to what level had the Federal Reserve reduced the federal funds rate by December 2008?Federal Reserve History, "The Great Recession". DSST outline area V (20%), e. Historical US financial crises
The Federal Reserve buys government bonds in the open market. What happens to the monetary base?Saylor Academy open textbook Money and Banking, section 15.2 Open Market Operations. DSST outline area V (20%), b. Conducting monetary policy
In the IS-LM model, how does a fiscal stimulus differ from a monetary stimulus in its effect on interest rates?Saylor Academy open textbook Money and Banking, section 22.2 Implications for Monetary Policy. DSST outline area V (20%), d. Monetary vs. fiscal policy
In the simple deposit multiplier model, the required reserve ratio is 10 percent. By how much can deposits grow after reserves rise by $100?Saylor Academy open textbook Money and Banking, section 15.3 A Simple Model of Multiple Deposit Creation. DSST outline area V (20%), c. Interest rates and the impact on money supply
What did Federal Reserve Chairman Paul Volcker announce in October 1979?Federal Reserve History, "Volcker's Announcement of Anti-Inflation Measures". DSST outline area V (20%), e. Historical US financial crises
What did the Federal Reserve Board do to reserve requirement ratios in March 2020?Federal Reserve Board, "Reserve Requirements". DSST outline area V (20%), b. Conducting monetary policy
Who determines the interest rate that Federal Reserve Banks pay on reserve balances?Federal Reserve Board, "Interest on Reserve Balances". DSST outline area V (20%), b. Conducting monetary policy
Why did central banks find it hard to tell whether their monetary targets were working?Saylor Academy open textbook Money and Banking, section 17.3 Central Bank Targets. DSST outline area V (20%), a. Policy effectiveness
Why does the discount rate act as a ceiling on the federal funds rate?Saylor Academy open textbook Money and Banking, section 16.2 Open Market Operations and the Discount Window. DSST outline area V (20%), b. Conducting monetary policy
The international monetary system 5
The Basel Capital Accord of 1988 set what minimum for a bank's capital as a share of its risk-weighted assets?Bank for International Settlements, "History of the Basel Committee". DSST outline area VI (10%), a. International banking
Under the trilemma, or impossible trinity, a country that keeps a fixed exchange rate and free movement of capital must give up what?Saylor Academy open textbook Money and Banking, section 19.1 The Trilemma, or Impossible Trinity. DSST outline area VI (10%), d. Monetary policy in conjunction with exchange rates
What does a central bank do under a managed float, also called a dirty float?Saylor Academy open textbook Money and Banking, section 19.3 The Managed or Dirty Float. DSST outline area VI (10%), d. Monetary policy in conjunction with exchange rates
What does purchasing power parity predict?Saylor Academy open textbook Money and Banking, section 18.3 Long-Run Determinants of Exchange Rates. DSST outline area VI (10%), c. International payments and exchange rates
Which two institutions did the delegates at Bretton Woods agree to establish in July 1944?Federal Reserve History, "Creation of the Bretton Woods System". DSST outline area VI (10%), b. International monetary institutions and debt crises
How this list was compiled: Our own questions, written to the content outline of the DSST Money and Banking fact sheet (Prometric, Rev 1/2026, https://getcollegecredit.com/wp-content/uploads/2025/11/Money-and-Banking-1.pdf, read 2026-10-08): the role and kinds of money 6%, commercial banks and other financial intermediaries 25%, money and macroeconomic activity 19%, central banking and the Federal Reserve System 20%, monetary policy in the United States 20%, the international monetary system 10%. The bank holds 3, 12, 10, 10, 10 and 5 questions. Each fact was read on 2026-10-08 on the public page named under its question: the Saylor Academy open textbook Money and Banking, the Federal Reserve Board, Federal Reserve History, the Federal Deposit Insurance Corporation and the Bank for International Settlements. Three answers are arithmetic on the numbers the question prints. Licence: Questions, choices and explanations are original work of this site.
How it works
This free Money and Banking DSST practice test has 50 questions of our own on money, banks, the Federal Reserve and monetary policy. It is unofficial and not affiliated with, endorsed by or sponsored by Prometric, which owns and administers the DSST exams.
Read the full guide
Six areas and their weights
The fact sheet, revised 1/2026, gives the role and kinds of money 6%, commercial banks and other financial intermediaries 25%, money and macroeconomic activity 19%, central banking and the Federal Reserve System 20%, monetary policy in the United States 20%, and the international monetary system 10%. The bank holds 3, 12, 10, 10, 10 and 5.
Questions and clock
Test day brings 100 questions and a 2-hour limit. Exam mode sets 50 questions against 60 minutes.
Current where it matters
Questions on how the Fed works today were read on federalreserve.gov, so they reflect the zero reserve requirement in force since March 2020.
Banks, the Fed and monetary policy are about two thirds of the outline between them.
Three questions need arithmetic: the deposit multiplier, the expenditure multiplier and the Fisher equation.
Questions and answers
Is there a DSST Money and Banking study guide?
Start with Prometric's free fact sheet, which gives the outline and two textbooks, Mishkin's and Kidwell's. Most answers here cite the Saylor Academy open textbook Money and Banking, free online, or the Federal Reserve's own pages.
What score do you need on the DSST Money and Banking exam?
A score of 400 is the minimum at which the American Council on Education recommends 3 semester hours of lower-level baccalaureate credit. It is not a percentage. Your own school awards the credit, so check what it accepts.
Are these real DSST Money and Banking questions?
No. Every question is ours, written from the outline and a public source and not from any exam form or fact sheet sample. A good score here means you know these facts, nothing more.