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

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Question 121

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A central bank allows individual banks to deposit and to borrow funds.

A) True
B) False

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Question 122

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A __________ represents an agreement by a bank to pay a foreign company a given amount if certain conditions are met

A) certificate of deposit
B) banker's acceptance
C) callable option
D) letter of credit

E) C) and D)
F) All of the above

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Question 123

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When traveling in other countries, tourists can use their MasterCard or Visa bankcards to obtain foreign currencies at ATMs.

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

Early in our nation's history, people generally accepted the importance of a central bank authority.

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

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

According to the Spotlight on Small Business box, merchant cash advance providers often charge much lower interest rates than traditional banks.

John searched for a new bank prior to filling out his direct deposit form at his new employer. He noted that Twenty/Four/Seven E-Bank, Inc., offered better interest rates on savings accounts and money market accounts; and it offered other amenities such as online banking and funds transfer that many traditional banks offer. What is the most logical reason that Twenty/Four/Seven can compete for customers by offering higher interest rates?

Which of the following represents a nonbank?

The ability to access funds without a penalty helps to explain why certificates of deposit (CDs) have gained popularity among conservative investors and savers.

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

The World Bank primarily finances projects to protect the environment.

The National Credit Union Administration provides coverage up to $250,000 per individual depositor at each credit union.

The Federal Reserve consists of seven Federal Reserve districts.

The Fed Chairman is in control of:

The U.S. government has done its best to create dollar bills that are easily duplicated.

A barter exchange is a system where you input into a system the goods and services that you are willing to trade, and receive trade credit.

When a customer purchases an item with a debit card:

Large pension funds represent a powerful force in U.S. financial markets.