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

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Question 171

True/False

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The Federal Reserve consists of seven Federal Reserve districts.

A) True
B) False

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Question 172

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

A) True
B) False

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Question 173

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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?

The problem with bartering is:

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

Last week Dave was looking for a place to deposit a $30,000 inheritance from his Great Aunt Martha who passed away three months ago.Although he does not plan to spend his money frivolously,he will need part of the funds from time to time for his college education - something he promised Great Aunt Martha he would achieve.After speaking with several sales consultants in banking and nonbank institutions,he likes the fact that he can open a stock brokerage account and a money-market account at Goodman Stacks Investment Company (a nonbank company),and will be issued checks for paying bills.You remind him that with the recent mergers between banking and nonbank institutions,he may be able to find a company that provides (both)the convenience of banking services (ATM,cash availability)and low risk/high risk securities products.

M-2 represents the most commonly used definition of the money supply.

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

A significant increase in the money supply creates inflationary pressures in the economy.

How did the Fed contribute to the banking crisis of 2008-2010?