Question 1

Which of the following is a bank service provided to help companies conduct business in other countries?

Accepted Answer

A)  Transaction letters
B)  Certificates of deposit
C)  Banker's depositories
D)  Currency exchangeE) A) and B)
F) A) and C)

Question 2

The Savings Association Insurance Fund insures the holders of accounts in savings and loan associations.

Accepted Answer

A) True 
 B)False

Question 3

The strength of the U.S. dollar relative to other currencies depends mainly on:

Accepted Answer

A)  the rate of inflation in the United States.
B)  the performance of the U.S. economy relative to other economies.
C)  how much gold backs the money supply.
D)  exchange rate decisions made by the International Monetary Fund.E) B) and C)
F) A) and D)

Question 4

As a response to the bank failures of the , a system of federal deposit insurance was established to strengthen the banking system.

Accepted Answer

A)  Civil War
B)  wildcat banking crisis of the 1880s
C)  Great Depression
D)  banking crisis of the early 1980sE) A) and B)
F) None of the above

Question 5

Last week Dave was looking for a place to deposit a $30,000 inheritance from his Great Aunt Martha who passed away three months ago. Although he does not plan to spend his money frivolously, he will need part of the funds from time to time for his college education - something he promised Great Aunt Martha he would achieve. After speaking with several sales consultants in banking and nonbank institutions, he likes the fact that he can open a stock brokerage account and a money-market account at Goodman Stacks Investment Company (a nonbank company), and will be issued checks for paying bills. You remind him that with the recent mergers between banking and nonbank institutions, he may be able to find a company that provides (both) the convenience of banking services (ATM, cash availability) and low risk / high risk securities products

Accepted Answer

A) True 
 B)False

Question 6

Economic growth and the creation of jobs depend on the availability of money.

Accepted Answer

A) True 
 B)False

Question 7

An increase in the rate of inflation would likely result from a(n) :

Accepted Answer

A)  decrease in spending by the federal government.
B)  rise in the unemployment rate.
C)   rise in interest rates.
D)   increase in the supply of money in circulation.E) None of the above
F) A) and D)

Question 8

Traditionally, banks provide loans to individuals and companies according to the recipient's .

Accepted Answer

A)  future earnings potential
B)  family history
C)  volume of credit already established
D)  creditworthinessE) None of the above
F) C) and D)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

The World Bank provides funding for:

Accepted Answer

A)  the developed nations in Europe and Asia.
B)  firms that want to participate in international trade but lack foreign exchange.
C)  multinational corporations that have a strong credit rating.
D)  projects to improve the standard of living in less-developed nations.E) A) and C)
F) None of the above

Question 11

Andrea has three types of deposits at her credit union. She has a checking account in her own name worth $3,123, a joint savings account with her husband, which currently has $14,904 in it, and an IRA account worth $92,449. Her deposits are at risk because they exceed the $100,000 limit on insurance coverage by NCUA.

Accepted Answer

A) True 
 B)False

Question 12

Most countries restrict the flow of money in and out of their borders.

Accepted Answer

A) True 
 B)False

Question 13

The International Monetary Fund does not lend money.

Accepted Answer

A) True 
 B)False

Question 14

A debit card is better than a credit card because it allows the purchaser to float a short term loan, until the credit card company sends the bills at the end of the month.

Accepted Answer

A) True 
 B)False

Question 15

Brokerage firms now compete with commercial banks by offering high yield combination savings and checking accounts.

Accepted Answer

A) True 
 B)False

Question 16

Theoretically, with the proper monetary policy, the U.S. economy can continue to grow without causing inflation.

Accepted Answer

A) True 
 B)False

Question 17

The Fed uses to regulate the money supply.

Accepted Answer

A)  stock market investments
B)  the deposit requirement
C)  the political negotiation process
D)  the discount rateE) A) and B)
F) A) and C)

Question 18

Originally, savings and loan associations:

Accepted Answer

A)  offered brokerage services to small investors.
B)  promoted consumer thrift and home ownership.
C)  acted as a fiscal agent for the federal government, and issued and redeemed U.S. savings bonds.
D)  handled the overflow of business from national and state banks.E) None of the above
F) C) and D)

Question 19

Which of the following represents one way the Fed increases the amount of money in circulation?

Accepted Answer

A)  Reduce taxes
B)  Raise the discount rate
C)  Buy government securities
D)  Increase the reserve requirementE) A) and B)
F) A) and C)

Question 20

International bankers make loans wherever they can get the maximum return for their money.

Accepted Answer

A) True 
 B)False

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

Correct Answer
verified

Most countries restrict the flow of money in and out of their borders.

Correct Answer
verified

Originally, savings and loan associations:

Correct Answer
verified

Brokerage firms now compete with commercial banks by offering high yield combination savings and checking accounts.

Correct Answer
verified

The strength of the U.S. dollar relative to other currencies depends mainly on:

Correct Answer
verified

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

Correct Answer
verified

The Fed uses to regulate the money supply.

Correct Answer
verified

Which of the following is a bank service provided to help companies conduct business in other countries?

Correct Answer
verified

A debit card is better than a credit card because it allows the purchaser to float a short term loan, until the credit card company sends the bills at the end of the month.

Correct Answer
verified

Correct Answer
verified

The Savings Association Insurance Fund insures the holders of accounts in savings and loan associations.

Correct Answer
verified

International bankers make loans wherever they can get the maximum return for their money.

Correct Answer
verified

Theoretically, with the proper monetary policy, the U.S. economy can continue to grow without causing inflation.

Correct Answer
verified

The World Bank provides funding for:

Correct Answer
verified

Which of the following represents one way the Fed increases the amount of money in circulation?

Correct Answer
verified

As a response to the bank failures of the , a system of federal deposit insurance was established to strengthen the banking system.

Correct Answer
verified

The International Monetary Fund does not lend money.

Correct Answer
verified

Economic growth and the creation of jobs depend on the availability of money.

Correct Answer
verified

Traditionally, banks provide loans to individuals and companies according to the recipient's .

Correct Answer
verified

An increase in the rate of inflation would likely result from a(n) :

Correct Answer
verified

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

Correct AnswerverifiedShow Answer

Most countries restrict the flow of money in and out of their borders.

Correct AnswerverifiedShow Answer

Originally, savings and loan associations:

Correct AnswerverifiedShow Answer

Brokerage firms now compete with commercial banks by offering high yield combination savings and checking accounts.

Correct AnswerverifiedShow Answer

The strength of the U.S. dollar relative to other currencies depends mainly on:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Fed uses to regulate the money supply.

Correct AnswerverifiedShow Answer

Which of the following is a bank service provided to help companies conduct business in other countries?

Correct AnswerverifiedShow Answer

A debit card is better than a credit card because it allows the purchaser to float a short term loan, until the credit card company sends the bills at the end of the month.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Savings Association Insurance Fund insures the holders of accounts in savings and loan associations.

Correct AnswerverifiedShow Answer

International bankers make loans wherever they can get the maximum return for their money.

Correct AnswerverifiedShow Answer

Theoretically, with the proper monetary policy, the U.S. economy can continue to grow without causing inflation.

Correct AnswerverifiedShow Answer

The World Bank provides funding for:

Correct AnswerverifiedShow Answer

Which of the following represents one way the Fed increases the amount of money in circulation?

Correct AnswerverifiedShow Answer

As a response to the bank failures of the , a system of federal deposit insurance was established to strengthen the banking system.

Correct AnswerverifiedShow Answer

The International Monetary Fund does not lend money.

Correct AnswerverifiedShow Answer

Economic growth and the creation of jobs depend on the availability of money.

Correct AnswerverifiedShow Answer

Traditionally, banks provide loans to individuals and companies according to the recipient's .

Correct AnswerverifiedShow Answer

An increase in the rate of inflation would likely result from a(n) :

Correct AnswerverifiedShow Answer

Correct Answer
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