Question 1

Money is anything people generally accept as payment for goods and services.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following accurately presents a major difference between Internet banks and traditional banks?

Accepted Answer

A)  The government does not regulate Internet banks.
B)  Traditional banks are prohibited from having ATMs.
C)  Internet banks have lower overhead costs.
D)  Traditional banks offer less personal care and attention to customers.E) C) and D)
F) All of the above

Question 3

The strength of the U.S. money system rests on the silver content of the coins.

Accepted Answer

A) True 
 B)False

Question 4

Early settlers of the New World relied heavily on barter because:

Accepted Answer

A)  They found barter more convenient than the use of money.
B)  Strict laws limited the number of coins that could be brought into the colonies.
C)  Money had not yet evolved.
D)  They wanted to protest against British control of the banking system.E) B) and C)
F) All of the above

Question 5

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 6

A major cause of the 2008-2009 banking crisis was the neglect of banks to seriously scrutinize loan applicants for creditworthiness.

Accepted Answer

A) True 
 B)False

Question 7

By reducing the reserve requirement, the Fed intends to increase the money supply.

Accepted Answer

A) True 
 B)False

Question 8

During the Civil War, gold and silver coins were hoarded not because of their currency value, but because they were worth more than currency.

Accepted Answer

A) True 
 B)False

Question 9

When the Federal Reserve pursues policies that increase interest rates, the amount of foreign funds flowing into the United States also increases.

Accepted Answer

A) True 
 B)False

Question 10

As a response to a rise in savings and loan failures, the federal government no longer insures holders of accounts in savings and loan associations.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following represent an independent agency of the U.S. government that insures bank deposits?

Accepted Answer

A)  National Deposit Assurance Cooperative
B)  Federal Deposit Insurance Corporation
C)  Insurance Corporation of America
D)  Deposit Protection FundE) A) and B)
F) B) and C)

Question 12

The Federal Reserve consists of seven Federal Reserve districts.

Accepted Answer

A) True 
 B)False

Question 13

To decrease the money supply, the Federal Reserve sells U.S. government bonds in open-market operations.

Accepted Answer

A) True 
 B)False

Question 14

Credit cards and debit cards eliminate the paper handling processes of using checks.

Accepted Answer

A) True 
 B)False

Question 15

Barter is the trading of goods and services for other goods and services.

Accepted Answer

A) True 
 B)False

Question 16

An electronic funds transfer system (EFT) is an electronic transaction system used for paying bills, making direct deposits of paychecks, and paying for a purchase.

Accepted Answer

A) True 
 B)False

Question 17

There is much speculation that prior to the banking crisis of 2008-2009, the Fed (Federal Reserve System) and the SEC (Securities and Exchange Commission) were not enforcing the regulations they were charged to enforce.

Accepted Answer

A) True 
 B)False

Question 18

Springfield National Bank holds $200 million in deposits from their customers. If the Fed sets the reserve requirement at 12 percent, Springfield must hold $24 million in cash at the bank or in non-interest-bearing deposits at the local Federal Reserve district bank.

Accepted Answer

A) True 
 B)False

Question 19

The Federal Reserve is the "bankers' bank."

Accepted Answer

A) True 
 B)False

Question 20

To decrease the money supply, the Federal Reserve sells U.S. government bonds in open-market operations.

Accepted Answer

A) True 
 B)False

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

To decrease the money supply, the Federal Reserve sells U.S. government bonds in open-market operations.

Correct AnswerverifiedShow Answer

During the Civil War, gold and silver coins were hoarded not because of their currency value, but because they were worth more than currency.

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

Money is anything people generally accept as payment for goods and services.

Correct AnswerverifiedShow Answer

Which of the following represent an independent agency of the U.S. government that insures bank deposits?

Correct AnswerverifiedShow Answer

Which of the following accurately presents a major difference between Internet banks and traditional banks?

Correct AnswerverifiedShow Answer

An electronic funds transfer system (EFT) is an electronic transaction system used for paying bills, making direct deposits of paychecks, and paying for a purchase.

Correct AnswerverifiedShow Answer

The strength of the U.S. money system rests on the silver content of the coins.

Correct AnswerverifiedShow Answer

Barter is the trading of goods and services for other goods and services.

Correct AnswerverifiedShow Answer

Credit cards and debit cards eliminate the paper handling processes of using checks.

Correct AnswerverifiedShow Answer

Early settlers of the New World relied heavily on barter because:

Correct AnswerverifiedShow Answer

There is much speculation that prior to the banking crisis of 2008-2009, the Fed (Federal Reserve System) and the SEC (Securities and Exchange Commission) were not enforcing the regulations they were charged to enforce.

Correct AnswerverifiedShow Answer

To decrease the money supply, the Federal Reserve sells U.S. government bonds in open-market operations.

Correct AnswerverifiedShow Answer

Springfield National Bank holds $200 million in deposits from their customers. If the Fed sets the reserve requirement at 12 percent, Springfield must hold $24 million in cash at the bank or in non-interest-bearing deposits at the local Federal Reserve district bank.

Correct AnswerverifiedShow Answer

The Federal Reserve is the "bankers' bank."

Correct AnswerverifiedShow Answer

The Federal Reserve consists of seven Federal Reserve districts.

Correct AnswerverifiedShow Answer

When the Federal Reserve pursues policies that increase interest rates, the amount of foreign funds flowing into the United States also increases.

Correct AnswerverifiedShow Answer

As a response to a rise in savings and loan failures, the federal government no longer insures holders of accounts in savings and loan associations.

Correct AnswerverifiedShow Answer

A major cause of the 2008-2009 banking crisis was the neglect of banks to seriously scrutinize loan applicants for creditworthiness.

Correct AnswerverifiedShow Answer

By reducing the reserve requirement, the Fed intends to increase the money supply.

Correct AnswerverifiedShow Answer

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