Question 1

Coins and bills are portable and durable.

Accepted Answer

A) True 
 B)False

Question 2

Technically, a bank can require depositors to give prior notice before they withdraw funds from time deposits.

Accepted Answer

A) True 
 B)False

Question 3

The Fed announces that it intends to implement policies to increase interest rates. Which of the following correctly identifies the most likely result of higher U.S. interest rates?

Accepted Answer

A)   More money will flow into the United States from foreign investors.
B)   The economy will experience an increase in business investment spending.
C)   The value of the dollar will fall relative to other currencies.
D)   The rate of inflation will increase.E) A) and C)
F) A) and B)

Question 4

The U.S. production of the Sacagawea dollar coins provides greater durability than paper dollar bills.

Accepted Answer

A) True 
 B)False

Question 5

Real dollars are made with various lines of colors such as peach and blue. They have art work that is off-center, and there are other identifiable watermarks for the purpose of making replication quite easy.

Accepted Answer

A) True 
 B)False

Question 6

The government is concerned about inflationary pressures that seem to be building within the nation. Restricting the growth of money supply provides an effective strategy to reduce these inflationary pressures.

Accepted Answer

A) True 
 B)False

Question 7

The organization responsible for conducting monetary policy in the United States is the:

Accepted Answer

A)   Federal Trade Commission.
B)   Council of Economic Advisors.
C)   Federal Reserve System.
D)   Federal Monetary Control Authority.E) A) and D)
F) All of the above

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A)   Federal Reserve System.
B)   Comptroller of the Currency.
C)   gold standard for currency, and the establishment of a gold repository at Fort Knox.
D)   FDIC.E) B) and C)
F) A) and D)

Question 10

Xavier deposited $75,000 in various individual accounts at his local credit union. He and his wife also have a joint savings account worth $34,500. What portion of these deposits is insured?

Accepted Answer

A)   $0, because the NCUA does not insure individual credit union deposits.
B)   $73,220
C)   $100,000
D)   $109,500E) None of the above
F) A) and B)

Question 11

When the Fed buys U.S. government securities, the:

Accepted Answer

A)   size of the federal deficit falls.
B)   discount rate rises.
C)   money supply increases.
D)   banking system loses reserves.E) None of the above
F) A) and B)

Question 12

While Federal Reserve actions impact domestic investors, they have little effect on decisions made by international investors.

Accepted Answer

A) True 
 B)False

Question 13

The Federal Reserve requires that ATM machines be located within 100 yards of a commercial bank.

Accepted Answer

A) True 
 B)False

Question 14

News reports indicate that the Fed plans to announce its third increase in the discount rate in the past five months. Additional reports suggest that the Fed may also increase the reserve requirement in the near future. Apparently the Fed perceives the number one problem facing the economy is:

Accepted Answer

A)   the size of the federal deficit.
B)   unemployment.
C)   excessively high interest rates.
D)   inflation.E) C) and D)
F) B) and D)

Question 15

In an electronic funds transfer (EFT) system, the information of a transaction is communicated from one computer to another.

Accepted Answer

A) True 
 B)False

Question 16

Critics of the World Bank charge the organization with:

Accepted Answer

A)   financially supporting the military of oppressive leaders.
B)   financing projects that damage the ecosystem.
C)   lending most of its money to poor nations.
D)   a wide array of computer security violations.E) B) and D)
F) A) and B)

Question 17

When the value of the U.S. dollar increases relative to other currencies:

Accepted Answer

A)   the rate of inflation increases.
B)   the size of the national debt decreases.
C)   foreign goods become less expensive to U.S. consumers.
D)   U.S. goods become less expensive to foreign buyers.E) C) and D)
F) A) and C)

Question 18

Commercial banks, savings and loan associations, and credit unions:

Accepted Answer

A)   specialize solely in loaning money for home mortgages.
B)   operate as nonprofit organizations.
C)   deposit their excess funds with the U.S. Treasury.
D)   accept deposits and make loans.E) B) and C)
F) None of the above

Question 19

International bankers prefer to invest in their own countries whenever possible.

Accepted Answer

A) True 
 B)False

Question 20

When the Fed increases the reserve requirement, banks make fewer loans.

Accepted Answer

A) True 
 B)False

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

The U.S. production of the Sacagawea dollar coins provides greater durability than paper dollar bills.

Correct AnswerverifiedShow Answer

When the value of the U.S. dollar increases relative to other currencies:

Correct AnswerverifiedShow Answer

The government is concerned about inflationary pressures that seem to be building within the nation. Restricting the growth of money supply provides an effective strategy to reduce these inflationary pressures.

Correct AnswerverifiedShow Answer

News reports indicate that the Fed plans to announce its third increase in the discount rate in the past five months. Additional reports suggest that the Fed may also increase the reserve requirement in the near future. Apparently the Fed perceives the number one problem facing the economy is:

Correct AnswerverifiedShow Answer

Technically, a bank can require depositors to give prior notice before they withdraw funds from time deposits.

Correct AnswerverifiedShow Answer

Xavier deposited $75,000 in various individual accounts at his local credit union. He and his wife also have a joint savings account worth $34,500. What portion of these deposits is insured?

Correct AnswerverifiedShow Answer

Coins and bills are portable and durable.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Critics of the World Bank charge the organization with:

Correct AnswerverifiedShow Answer

The Federal Reserve requires that ATM machines be located within 100 yards of a commercial bank.

Correct AnswerverifiedShow Answer

Real dollars are made with various lines of colors such as peach and blue. They have art work that is off-center, and there are other identifiable watermarks for the purpose of making replication quite easy.

Correct AnswerverifiedShow Answer

When the Fed buys U.S. government securities, the:

Correct AnswerverifiedShow Answer

Commercial banks, savings and loan associations, and credit unions:

Correct AnswerverifiedShow Answer

While Federal Reserve actions impact domestic investors, they have little effect on decisions made by international investors.

Correct AnswerverifiedShow Answer

The Fed announces that it intends to implement policies to increase interest rates. Which of the following correctly identifies the most likely result of higher U.S. interest rates?

Correct AnswerverifiedShow Answer

International bankers prefer to invest in their own countries whenever possible.

Correct AnswerverifiedShow Answer

When the Fed increases the reserve requirement, banks make fewer loans.

Correct AnswerverifiedShow Answer

The organization responsible for conducting monetary policy in the United States is the:

Correct AnswerverifiedShow Answer

In an electronic funds transfer (EFT) system, the information of a transaction is communicated from one computer to another.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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