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

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Question 31

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Which of the following reduces the costs involved with the Federal Reserve's check-clearing role?

A) A decrease in the use of the barter system
B) A reduction in the Fed's discount rate
C) An increase in the reserve requirement
D) An increase in the use of debit cards

E) A) and B)
F) A) and C)

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Question 32

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When a commercial bank fails,depositors lose all of their money.

A) True
B) False

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Question 33

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Historically,savings and loans always paid lower interest rates on time deposits.

The goal of Federal Reserve monetary policy is to affect the level of competition in the U.S.banking system.

The FDIC traditionally protects depositors up to $250,000 per account.

Large pension funds represent a powerful force in U.S.financial markets.

__________ currently provides for regulating international banking and finance practices.

Certificates of deposit CDs)represent demand deposits issued by banks.

By the time of the Civil War,the U.S.banking system operated:

While Federal Reserve actions impact domestic investors,they have little effect on decisions made by international investors.

An) __________ accepts savings and checking account deposits and provides home mortgage loans.

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.

Savings and loan associations are sometimes known as:

Commercial banks,savings and loan associations,and credit unions all represent components of the American banking system.

During the early 1980s,the federal government responded to the severe problems plaguing savings and loan associations by:

Lower fees and better interest rates motivate customers to open accounts with Internet banks.However,the lack of personal service and concern for information security encourages some customers to return to a traditional bank.

An increase in the rate of inflation would likely result from an) :

The ___________ plays a role in making certain that checks clear,and sellers get paid.

Patty supports a sustainability initiative at her bank to be paperless.Each time the bank issues checks or sends out a paper statement,it includes a promotion asking customers to support methods that eliminates paperwork.She encourages customers to use debit cards,smart cards,direct deposit and direct payments,as well as online statement retrieval.All of these tools are used in conjunction with the bank's ________________.

The reserve requirement represents the Fed's most powerful tool for conducting monetary policy.