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

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Question 111

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currently provides for regulating international banking and finance practices.

A) The Federal Reserve System
B) The World Bank
C) The International Monetary Fund
D) No organization

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

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Question 112

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

A) True
B) False

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Question 113

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Existing regulations prohibit Internet banking activities unless the bank also operates a traditional brick-and-mortar facility.

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

Abdul Industries wants to import some heavy machinery from a producer located in the Czech Republic. To facilitate payment to the Czech firm, Abdul arranged for its bank to issue a banker's acceptance. Under this arrangement, the bank pays the exporter after the equipment passes inspection.

As nonprofit institutions, credit unions enjoy an exemption from federal income taxes.

A few retailers enable their customers to pay for gas by using a card that electronically transmits information through an embedded radio-frequency antenna.

Commercial and consumer finance companies specialize in making low interest loans to individuals and businesses with strong credit ratings.

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.

The interest paid on time deposits, today, represents the main difference between time and demand deposits.

Thomas Jefferson proposed the establishment of the first central bank in the United States.

A series of bank failures and a cash shortage in 1907 led to the establishment of the Federal Reserve System in 1913.

A rapid increase in the money supply may lead to a(n) :

When the value of the dollar increases relative to the euro, the number of U.S. dollars needed to purchase a bottle of French wine decreases.

A letter of credit represents a promise that a bank will disburse a specified amount of funds at a particular time if certain conditions are met.

Smart cards contain a microprocessor chip that stores information about the user, such as drivers' license data and bank balance.

The World Bank primarily finances projects to improve the productivity and standard of living in less-developed nations.

According to the Reaching Beyond our Borders box, titled, "The Banking Crisis Goes Global", China:

The banking panic of 1907 and the resulting cash shortage led to the formation of the:

According to the Reaching Beyond Our Borders box in Chapter 19, titled, "The Banking Crisis Goes Global", several of China's small businesses could not continue to operate during the economic downturn of 2008-2009, without lending institutions willing to keep them afloat. Chinese banks tightened their belts, and many of these fledgling businesses went under.