Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

________ represents the most commonly used category of the money supply.

Accepted Answer

A)   M-1
B)   M-2
C)   M-3
D)   LE) None of the above
F) B) and C)

Question 3

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

Question 4

Many employers offer direct deposit as a convenient and cost-saving method of distributing employee pay each month.

Accepted Answer

A) True 
 B)False

Question 5

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

Question 6

Many S&Ls failed due to the inflation of the 1970s, deregulation, regulatory failure, and fraud.

Accepted Answer

A) True 
 B)False

Question 7

The president of the U.S. is in control of the money supply in the U.S.

Accepted Answer

A) True 
 B)False

Question 8

Ricardo has an authorized work permit issued by the U.S. government to work in the U.S. Each day, he travels from Mexico to El Paso, TX, to work in the construction trade. At the time that he was first employed, his U.S. employer issued him a(n)  ________. Each week, the employer scans his work stipend onto it. Ricardo can purchase with it, access cash through an ATM with it, and transfer funds with it. The risk for Ricardo is ________.

Accepted Answer

A)   paycheck; if the check is stolen, he is out the money.
B)   payroll debit card; it serves as a credit card, so if stolen he is out the money and any money he had left from the previous pay date.
C)   payroll debit card; if it is lost or stolen and someone successfully uses it to make purchases, he has no recourse-he is simply out the money.
D)   ETF voucher; minimal because funds are transferred directly from the employer's account to the employee's account.E) All of the above
F) A) and D)

Question 9

Commercial banks primarily serve two types of customers-

Accepted Answer

A)   depositors and borrowers.
B)   commercial clients and residential clients.
C)   secured creditors and unsecured creditors.
D)   short-term borrowers and long-term borrowers.E) None of the above
F) All of the above

Question 10

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 11

Importers Direct arranged to have a French winery ship a large quantity of fine wine to the United States. By signing a(n)  ________, Importers Direct authorized its bank to make full payment to the French winery if and when the wine arrives at the Importers Direct warehouse in Philadelphia.

Accepted Answer

A)   letter of credit
B)   certificate of deposit
C)   trade agreement
D)   banker's acceptanceE) A) and D)
F) A) and C)

Question 12

Credit unions represent nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members.

Accepted Answer

A) True 
 B)False

Question 13

The practices of several participants (for-profit companies, government regulators, and customers) came together to create the crisis that caused the collapse of several banks, financial services companies, and corporations.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following historical events motivated Congress to establish the Federal Reserve System?

Accepted Answer

A)   the significant outflow of gold during the Civil War
B)   the collapse of the Second National Bank of the United States
C)   the banking panic and cash shortage of 1907
D)   the Great DepressionE) A) and D)
F) A) and C)

Question 15

The United States first established a central bank in 1913 by establishing the Federal Reserve System.

Accepted Answer

A) True 
 B)False

Question 16

The electronic transfer of money increases the Federal Reserve's check-clearing operations.

Accepted Answer

A) True 
 B)False

Question 17

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) A) and C)

Question 18

Barter involves the use of electronic payment systems, like PayPal, for online transactions.

Accepted Answer

A) True 
 B)False

Question 19

Anthony would like to have his brokerage firm handle more of his financial needs because he has been pleased with the service provided when he bought and sold stocks and bonds. If he explores the services offered by such firms in more depth, he will find that

Accepted Answer

A)   federal laws prohibit brokerage firms from competing with banks, savings and loan associations, and credit unions.
B)   although brokerage firms can offer some banking services, they typically are less efficient at providing them than banks, because they specialize in buying and selling securities.
C)   brokerage firms are becoming serious competitors for banks and other depository institutions by offering high-yield combination savings and checking accounts and money market accounts, as well as certain types of loans.
D)   although brokerage firms offer attractive banking services, federal law prohibits individual investors from holding both a checking account and a securities account with the same firm.E) A) and C)
F) None of the above

Question 20

The U.S. government's lack of regulation alone caused the banking crisis and collapse of banks that had been in business for several decades.

Accepted Answer

A) True 
 B)False

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

The United States first established a central bank in 1913 by establishing the Federal Reserve System.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

The president of the U.S. is in control of the money supply in the U.S.

Correct Answer
verified

Many S&Ls failed due to the inflation of the 1970s, deregulation, regulatory failure, and fraud.

Correct Answer
verified

The practices of several participants (for-profit companies, government regulators, and customers) came together to create the crisis that caused the collapse of several banks, financial services companies, and corporations.

Correct Answer
verified

Credit unions represent nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members.

Correct Answer
verified

________ represents the most commonly used category of the money supply.

Correct Answer
verified

The electronic transfer of money increases the Federal Reserve's check-clearing operations.

Correct Answer
verified

Originally, savings and loan associations

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Importers Direct arranged to have a French winery ship a large quantity of fine wine to the United States. By signing a(n) ________, Importers Direct authorized its bank to make full payment to the French winery if and when the wine arrives at the Importers Direct warehouse in Philadelphia.

Correct Answer
verified

The U.S. government's lack of regulation alone caused the banking crisis and collapse of banks that had been in business for several decades.

Correct Answer
verified

Commercial banks primarily serve two types of customers-

Correct Answer
verified

Which of the following historical events motivated Congress to establish the Federal Reserve System?

Correct Answer
verified

Anthony would like to have his brokerage firm handle more of his financial needs because he has been pleased with the service provided when he bought and sold stocks and bonds. If he explores the services offered by such firms in more depth, he will find that

Correct Answer
verified

Many employers offer direct deposit as a convenient and cost-saving method of distributing employee pay each month.

Correct Answer
verified

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

Correct Answer
verified

Barter involves the use of electronic payment systems, like PayPal, for online transactions.

Correct Answer
verified

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

The United States first established a central bank in 1913 by establishing the Federal Reserve System.

Correct AnswerverifiedShow Answer

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

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

The president of the U.S. is in control of the money supply in the U.S.

Correct AnswerverifiedShow Answer

Many S&Ls failed due to the inflation of the 1970s, deregulation, regulatory failure, and fraud.

Correct AnswerverifiedShow Answer

The practices of several participants (for-profit companies, government regulators, and customers) came together to create the crisis that caused the collapse of several banks, financial services companies, and corporations.

Correct AnswerverifiedShow Answer

Credit unions represent nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members.

Correct AnswerverifiedShow Answer

________ represents the most commonly used category of the money supply.

Correct AnswerverifiedShow Answer

The electronic transfer of money increases the Federal Reserve's check-clearing operations.

Correct AnswerverifiedShow Answer

Originally, savings and loan associations

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Importers Direct arranged to have a French winery ship a large quantity of fine wine to the United States. By signing a(n) ________, Importers Direct authorized its bank to make full payment to the French winery if and when the wine arrives at the Importers Direct warehouse in Philadelphia.

Correct AnswerverifiedShow Answer

The U.S. government's lack of regulation alone caused the banking crisis and collapse of banks that had been in business for several decades.

Correct AnswerverifiedShow Answer

Commercial banks primarily serve two types of customers-

Correct AnswerverifiedShow Answer

Which of the following historical events motivated Congress to establish the Federal Reserve System?

Correct AnswerverifiedShow Answer

Anthony would like to have his brokerage firm handle more of his financial needs because he has been pleased with the service provided when he bought and sold stocks and bonds. If he explores the services offered by such firms in more depth, he will find that

Correct AnswerverifiedShow Answer

Many employers offer direct deposit as a convenient and cost-saving method of distributing employee pay each month.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Barter involves the use of electronic payment systems, like PayPal, for online transactions.

Correct AnswerverifiedShow Answer

Correct Answer
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