Question 1

High start-up costs cause online banks, such as E*Trade Bank, to have higher operating costs than traditional banks.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

If the Fed increases interest rates in the U.S. relative to other nations,

Accepted Answer

A)   foreign investors are likely to transfer funds to U.S. investments.
B)   foreign investors are likely to reduce their investment in U.S. securities.
C)   foreign governments will likely reduce their interest rates further, to remain complementary to what the U.S. is doing.
D)   foreign investors will see this as a sign of a looming recession and redirect their funds to time deposits.E) All of the above
F) None of the above

Question 4

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

Accepted Answer

A)   National Check Register
B)   Federal Reserve System
C)   Uniform Commercial Check Processors
D)   paypal.com networkE) A) and C)
F) A) and B)

Question 5

Electronic funds transfer (EFT) tools include debit cards, smart cards, direct deposit, direct payments, and electronic check conversion.

Accepted Answer

A) True 
 B)False

Question 6

The M-1 money supply includes money in savings accounts, mutual funds, and money market accounts.

Accepted Answer

A) True 
 B)False

Question 7

Although there are many features about online banking that customers do not care for, they are seldom concerned with security due to continued assurances by the banking industry.

Accepted Answer

A) True 
 B)False

Question 8

The Federal Reserve fulfills its role as a "lender of last resort" when it loans funds to

Accepted Answer

A)   small businesses that are unable to obtain loans from other sources.
B)   banks during banking emergencies.
C)   major corporations that are on the verge of bankruptcy.
D)   the federal government when deficits exceed borrowing limits set by Congress.E) C) and D)
F) A) and D)

Question 9

A growing trend today is mobile banking. In fact, nearly 90 million customers make deposits by taking a photo of their checks.

Accepted Answer

A) True 
 B)False

Question 10

An increase in the discount rate produces a decrease in money supply.

Accepted Answer

A) True 
 B)False

Question 11

Banks focus on the creditworthiness of the borrower when determining whether to grant a loan.

Accepted Answer

A) True 
 B)False

Question 12

Changes in the money supply produce little or no change in inflation, employment, and economic growth.

Accepted Answer

A) True 
 B)False

Question 13

One thing is for certain, the average borrower's risk-averse behavior did not contribute to the problems that spiraled out of control and caused the recent banking crisis.

Accepted Answer

A) True 
 B)False

Question 14

When the Fed sells U.S. government securities, the U.S. money supply increases.

Accepted Answer

A) True 
 B)False

Question 15

One of the most important aspects of the banking legislation passed during the 1930s was that it established

Accepted Answer

A)   the Federal Reserve System.
B)   the gold standard for currency.
C)   the Comptroller of the currency.
D)   federal deposit insurance.E) A) and C)
F) A) and D)

Question 16

Pension funds are monies put aside by corporations, nonprofit organizations, or unions to fund the financial needs of their employees, upon retirement.

Accepted Answer

A) True 
 B)False

Question 17

Open-market operations involve

Accepted Answer

A)   monitoring the reserve requirement.
B)   the buying and selling of bonds.
C)   increasing and decreasing interest rates.
D)   participating with the IMF.E) A) and B)
F) B) and C)

Question 18

The problem with bartering is

Accepted Answer

A)   one person in the trade does not feel he/she got a fair shake.
B)   there is a significant amount of corruption in the process, and things get stolen before they are traded.
C)   it is not an easy process, and often cumbersome to carry goods to the place of trade.
D)   it has no place in today's international trading operations.E) A) and B)
F) None of the above

Question 19

Rico need not worry that his $8,347 in a checking account at Bigbux Bank could be lost if the bank fails, because Bigbux is a Federal Deposit Insurance Corporation (FDIC) member bank.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following can include an embedded RFID chip that allows the holder to access secure areas in buildings or buy gas with the swipe of a card?

Accepted Answer

A)   smart cards
B)   direct deposit cards
C)   e-cards
D)   check conversion cardsE) A) and D)
F) A) and C)

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

When the Fed sells U.S. government securities, the U.S. money supply increases.

Correct AnswerverifiedShow Answer

High start-up costs cause online banks, such as E*Trade Bank, to have higher operating costs than traditional banks.

Correct AnswerverifiedShow Answer

The problem with bartering is

Correct AnswerverifiedShow Answer

One of the most important aspects of the banking legislation passed during the 1930s was that it established

Correct AnswerverifiedShow Answer

Rico need not worry that his $8,347 in a checking account at Bigbux Bank could be lost if the bank fails, because Bigbux is a Federal Deposit Insurance Corporation (FDIC) member bank.

Correct AnswerverifiedShow Answer

The M-1 money supply includes money in savings accounts, mutual funds, and money market accounts.

Correct AnswerverifiedShow Answer

Changes in the money supply produce little or no change in inflation, employment, and economic growth.

Correct AnswerverifiedShow Answer

A growing trend today is mobile banking. In fact, nearly 90 million customers make deposits by taking a photo of their checks.

Correct AnswerverifiedShow Answer

One thing is for certain, the average borrower's risk-averse behavior did not contribute to the problems that spiraled out of control and caused the recent banking crisis.

Correct AnswerverifiedShow Answer

If the Fed increases interest rates in the U.S. relative to other nations,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An increase in the discount rate produces a decrease in money supply.

Correct AnswerverifiedShow Answer

Open-market operations involve

Correct AnswerverifiedShow Answer

Although there are many features about online banking that customers do not care for, they are seldom concerned with security due to continued assurances by the banking industry.

Correct AnswerverifiedShow Answer

Pension funds are monies put aside by corporations, nonprofit organizations, or unions to fund the financial needs of their employees, upon retirement.

Correct AnswerverifiedShow Answer

Electronic funds transfer (EFT) tools include debit cards, smart cards, direct deposit, direct payments, and electronic check conversion.

Correct AnswerverifiedShow Answer

Banks focus on the creditworthiness of the borrower when determining whether to grant a loan.

Correct AnswerverifiedShow Answer

The Federal Reserve fulfills its role as a "lender of last resort" when it loans funds to

Correct AnswerverifiedShow Answer

Which of the following can include an embedded RFID chip that allows the holder to access secure areas in buildings or buy gas with the swipe of a card?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified