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

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Question 81

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

A) True
B) False

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Question 82

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

A) True
B) False

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Question 83

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Inflation occurs in an economy with too little money chasing too many goods.

The ______ definition of money supply includes money that is quickly and easily accessed.

The board of governors of the Federal Reserve System determines:

__________ represents the most commonly used definition of the money supply.

Many S&Ls failed when capital gains taxes increased in the late 70s and early 80s,making it less attractive to invest in real estate and causing investors to walk away from their property loans.

Hottie Potatee,a popular chain of urban potato-bars buys its multi-processing ovens from a German company.With its current push for expansion,the company has signed a ___________ with Across-the-Pond,Inc. ,Global Banking Company,to issue payment to the German manufacturer,once the ovens are installed and Hottie Potatee is assured that the ovens meet its quality assurance standards.

When a commercial bank fails,depositors lose all of their money.

After years of banking with Quality Bank and Trust,Saul decided to switch to a competing institution.Thanks to changes in government regulation,his search will uncover a variety of options,however,he will also learn that banks and nonbanks have merged in order to be more competitive in the banking and financial services industries,which may or may not increase his options.

Alan works as a loan officer for a major U.S.commercial bank,specializing in international loans.When considering loans to governments and businesses in other nations,Alan:

Open-market operations involve:

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

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

Mini-Case The Bank of Bramblewood survived the Great Depression through the dedication,hard work,and conservative practices of its first president,Red E.Kash.Indeed,Red's personal drive and business skills helped the Bank of Bramblewood thrive during his 50-year tenure as president.After his retirement his granddaughter,Patty,took a position with the bank.Patty inherited her grandfather's business skills and by 1994 she had risen to become the second member of the Kash family to head the bank. Patty admits she owes a great deal to her grandfather's leadership and advice,but she also quickly points out that the banking industry has changed significantly since Red retired.Patty graduated from college with a degree in finance,and also holds several certifications with the American Institute of Banking."What Granddad achieved during his era was truly remarkable," Patty points out."But times have changed,and banking regulations and bank competitors have certainly changed.If we hope to prosper in this century we have to adjust to new competition,learn to work with new technologies,and take advantage of new opportunities.The Bank of Bramblewood has always operated for the benefit of our customers and we will continue to do so.But we must serve them more efficiently and creatively than in the past." -As the bank has grown and expanded to other towns in its region,several of its business customers are participating in global trade.Which of the following services provided by the bank would help companies conduct international business?

After Bill and Jillian deposited nearly $30,000 in a savings account at Farmers National Bank,the bank failed and filed for bankruptcy.Because the Farmers National Bank was an FDIC member bank,Bill and Jillian's savings:

The goal of Federal Reserve monetary policy is to affect the level of competition in the U.S.banking system.

To stimulate the economy during a recession,the Fed would:

The currencies of some countries,although durable and portable are relatively unstable,which makes international exchanges difficult.

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