Economics Semester Exam

Question

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Question
What impacts did the decentralization of the U.S. banking system during the Free Banking Era have on the currency in the United States? Select the two correct answers.(1 point)
Responses

The purchasing power currencies issued by state banks varied wildly from state to state.
The purchasing power currencies issued by state banks varied wildly from state to state.

Monetary reserves decreased.
Monetary reserves decreased.

The money supply declined.
The money supply declined.

The amount of loanable funds increased.
The amount of loanable funds increased.

Land was frequently purchased with counterfeit currency.

Answer 1

The two correct answers regarding the impacts of the decentralization of the U.S. banking system during the Free Banking Era on the currency in the United States are:

1. The purchasing power currencies issued by state banks varied wildly from state to state.

2. Land was frequently purchased with counterfeit currency.

These reflect the instability and variability in currency value due to the lack of a centralized banking authority and inconsistent regulations across states.