Question 1

Both checks and debit cards will immediately transfers funds from the customer's account to the seller's account.

Accepted Answer

A) True 
 B)False

Question 2

Economic events in other nations seldom impact the powerful U.S.economy.

Accepted Answer

A) True 
 B)False

Question 3

Banks prefer that customers use an electronic funds transfer system rather than traditional methods of payment because:

Accepted Answer

A)   traditional payments are subject to regulation by the Fed and electronic transactions are not.
B)   electronic funds are subject to a smaller reserve requirement than traditional funds.
C)   electronic funds transfer is more efficient and less expensive for banks than traditional check-based payments.
D)   the bank generates advertising revenue from its website.E) All of the above
F) B) and D)

Question 4

In the early 2000s,banks took the mortgages that they owned,created mortgage-backed securities out of them,and sold them as safe investments.

Accepted Answer

A) True 
 B)False

Question 5

Commercial banks,savings and loan associations,and credit unions:

Accepted Answer

A)   specialize solely in loaning money for home mortgages.
B)   operate as nonprofit organizations.
C)   deposit their excess funds with the U.S.Treasury.
D)   accept deposits and make loans.E) A) and D)
F) A) and C)

Question 6

From a bank's point of view,debit cards and credit cards are treated in identical ways.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements most accurately represents the history of U.S.banking?

Accepted Answer

A)   Although many technological changes have occurred,and banks have grown tremendously in size,the basic structure of banking in the United States has survived stability since the Revolutionary War.
B)   A major trend in U.S.banking was a move from federal control during the 1800s and early 1900s to a system now controlled by individual states.
C)   Although the early history of banking in the United States was very chaotic,the establishment of the Fed stabilized the banking system.
D)   The U.S.banking system has experienced a great deal of change and instability throughout its history.E) A) and B)
F) B) and D)

Question 8

Persons with deposits less than $100,000 in banks,savings and loans,and credit unions run the risk of losing their money in an economic downturn.

Accepted Answer

A) True 
 B)False

Question 9

If you are trying to sell your state-of-the-art bicycles into the Japanese market,you are likely to sell more bicycles if the dollar has strength against the Japanese yen.

Accepted Answer

A) True 
 B)False

Question 10

In the early 1800s,the United States allowed banks to issue different kinds of currencies.

Accepted Answer

A) True 
 B)False

Question 11

The Megabux National Bank currently has deposits of $200 million.If the Fed establishes a reserve requirement of 12 percent,Megabux National must hold reserves of _______ against its deposits.

Accepted Answer

A)   $12 million
B)   $24 million
C)   $176 million
D)   $200 millionE) B) and C)
F) A) and D)

Question 12

The ___________ represents one of the Fed's most powerful monetary policy tools.

Accepted Answer

A)   reserve requirement
B)   discount rate
C)   margin requirement
D)   working capital requirementE) None of the above
F) A) and B)

Question 13

The FDIC exists to maintain the public's confidence in the banking system.

Accepted Answer

A) True 
 B)False

Question 14

It's no secret these days that the People's Bank of China is fat with cash from the increasing rate of Chinese exporting.As a smart player on the global stage,which of the following strategic decisions will the People's Bank of China probably do on a daily basis?

Accepted Answer

A)   Invest its free cash in the securities of other nations whose interest rates remain at a low and acceptable rate,for a long period of time.
B)   Limit its global investment of free cash,and continue to invest in the construction trade in China,to build more factories,while providing its clientele with the highest possible interest rates.
C)   Invest its free cash in the securities of other nations who do not participate in the same type of industries such as soft goods and electronics.
D)   Invest its free cash in the securities of other nations where it can get the highest available interest rate,for the shortest period of time.E) A) and D)
F) None of the above

Question 15

Alexander Hamilton persuaded Congress to create a central bank.

Accepted Answer

A) True 
 B)False

Question 16

A __________ is a profit-seeking organization that receives deposits from individuals and corporations and uses some of these deposits to make loans.

Accepted Answer

A)   credit union
B)   Federal Reserve Bank
C)   commercial bank
D)   consumer finance companyE) C) and D)
F) B) and D)

Question 17

A time deposit that earns interest is a ______________.

Accepted Answer

A)   certificate of deposit
B)   passbook account
C)   discount deposit
D)   NOW accountE) A) and D)
F) None of the above

Question 18

The three basic tools the Fed uses to manage the money supply are reserve requirements,open-market operations,and the discount rate.

Accepted Answer

A) True 
 B)False

Question 19

The strength of the U.S.dollar depends on the strength of the U.S.economy relative to the economies of other nations.

Accepted Answer

A) True 
 B)False

Question 20

____________ represent money set aside by corporations,nonprofit organizations,or unions to cover part of the retirement needs of their members.

Accepted Answer

A)   Annuity accounts
B)   Pension funds
C)   Individual retirement accounts
D)   Term-life retirement fundsE) A) and B)
F) A) and C)

Exam 20: Money, Financial Institutions, and the Federal Reserve

From a bank's point of view,debit cards and credit cards are treated in identical ways.

Correct AnswerverifiedShow Answer

The ___________ represents one of the Fed's most powerful monetary policy tools.

Correct AnswerverifiedShow Answer

Banks prefer that customers use an electronic funds transfer system rather than traditional methods of payment because:

Correct AnswerverifiedShow Answer

Both checks and debit cards will immediately transfers funds from the customer's account to the seller's account.

Correct AnswerverifiedShow Answer

It's no secret these days that the People's Bank of China is fat with cash from the increasing rate of Chinese exporting.As a smart player on the global stage,which of the following strategic decisions will the People's Bank of China probably do on a daily basis?

Correct AnswerverifiedShow Answer

The three basic tools the Fed uses to manage the money supply are reserve requirements,open-market operations,and the discount rate.

Correct AnswerverifiedShow Answer

A __________ is a profit-seeking organization that receives deposits from individuals and corporations and uses some of these deposits to make loans.

Correct AnswerverifiedShow Answer

The Megabux National Bank currently has deposits of $200 million.If the Fed establishes a reserve requirement of 12 percent,Megabux National must hold reserves of _______ against its deposits.

Correct AnswerverifiedShow Answer

Commercial banks,savings and loan associations,and credit unions:

Correct AnswerverifiedShow Answer

____________ represent money set aside by corporations,nonprofit organizations,or unions to cover part of the retirement needs of their members.

Correct AnswerverifiedShow Answer

The strength of the U.S.dollar depends on the strength of the U.S.economy relative to the economies of other nations.

Correct AnswerverifiedShow Answer

Which of the following statements most accurately represents the history of U.S.banking?

Correct AnswerverifiedShow Answer

In the early 2000s,banks took the mortgages that they owned,created mortgage-backed securities out of them,and sold them as safe investments.

Correct AnswerverifiedShow Answer

Alexander Hamilton persuaded Congress to create a central bank.

Correct AnswerverifiedShow Answer

The FDIC exists to maintain the public's confidence in the banking system.

Correct AnswerverifiedShow Answer

If you are trying to sell your state-of-the-art bicycles into the Japanese market,you are likely to sell more bicycles if the dollar has strength against the Japanese yen.

Correct AnswerverifiedShow Answer

A time deposit that earns interest is a ______________.

Correct AnswerverifiedShow Answer

Economic events in other nations seldom impact the powerful U.S.economy.

Correct AnswerverifiedShow Answer

In the early 1800s,the United States allowed banks to issue different kinds of currencies.

Correct AnswerverifiedShow Answer

Persons with deposits less than $100,000 in banks,savings and loans,and credit unions run the risk of losing their money in an economic downturn.

Correct AnswerverifiedShow Answer

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