Question 1

Alexander Hamilton persuaded Congress to create a central bank.

Accepted Answer

A) True 
 B)False

Question 2

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 3

The global money markets trade about $5 trillion every day.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)   The government does not regulate online banks.
B)   Traditional banks are prohibited from having ATMs.
C)   Online banks have lower overhead costs.
D)   Traditional banks offer less personal care and attention to customers.E) A) and D)
F) None of the above

Question 5

Which of the following is a bank service provided to help companies conduct business in other countries?

Accepted Answer

A)   transaction letters
B)   certificates of deposit
C)   banker's depositories
D)   currency exchangeE) C) and D)
F) B) and D)

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

A savings account is also known as a time deposit.

Accepted Answer

A) True 
 B)False

Question 8

A time deposit that earns interest is a

Accepted Answer

A)   certificate of deposit.
B)   passbook account.
C)   discount deposit.
D)   NOW account.E) A) and B)
F) A) and D)

Question 9

When the Federal Reserve acts to reduce inflation, they decrease the reserve requirement.

Accepted Answer

A) True 
 B)False

Question 10

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 11

As a relatively poor nation, Forlornia wants to obtain funds for a project to improve the availability of water and electricity. Forlornia should contact the International Monetary Fund.

Accepted Answer

A) True 
 B)False

Question 12

Discuss the methods the Fed uses to enact monetary policy and provide an explanation of the effects these methods have on the supply of money.

Accepted Answer

The Federal Reserve System has three bas...

Question 13

Banks help businesses operate in other countries by exchanging the currency of one nation for the currency of another.

Accepted Answer

A) True 
 B)False

Question 14

Historically, savings and loans always paid lower interest rates on time deposits.

Accepted Answer

A) True 
 B)False

Question 15

The Federal Deposit Insurance Corporation (FDIC)  operates as a(n)

Accepted Answer

A)   department of the Federal Reserve System and sells insurance to mortgage holders.
B)   independent agency of the U.S. government, and sells insurance to banks.
C)   arm of the Department of the Treasury.
D)   private nonprofit cooperative operated by member banks, offering insurance premiums for banking clients.E) None of the above
F) C) and D)

Question 16

Roberto deposited $66,000 in various individual accounts at his local credit union. He and his wife also have a joint savings account worth $54,700. What portion of these deposits is insured?

Accepted Answer

A)   $0, because the NCUA does not insure individual credit union deposits.
B)   $66,000
C)   $54,700
D)   $120,700E) None of the above
F) All of the above

Question 17

Describe and compare the three major types of organizations that make up the U.S. banking system: commercial banks, savings and loan associations, and credit unions.

Accepted Answer

The U.S. banking system consists primari...

Question 18

Which of the following is included in the M-2 definition of the money supply but NOT in the M-1 definition?

Accepted Answer

A)   currency
B)   checking account deposits
C)   traveler's checks
D)   savings account depositsE) B) and C)
F) A) and D)

Question 19

The technical name for a savings account is a

Accepted Answer

A)   time deposit.
B)   demand deposit.
C)   deferred account.
D)   retained income account.E) All of the above
F) A) and B)

Question 20

The rate of interest charged by the Federal Reserve is called the federal funds rate.

Accepted Answer

A) True 
 B)False

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

Which of the following is included in the M-2 definition of the money supply but NOT in the M-1 definition?

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

Which of the following is a bank service provided to help companies conduct business in other countries?

Correct AnswerverifiedShow Answer

The global money markets trade about $5 trillion every day.

Correct AnswerverifiedShow Answer

Discuss the methods the Fed uses to enact monetary policy and provide an explanation of the effects these methods have on the supply of money.

Correct AnswerverifiedThe Federal Reserve System has three bas...View AnswerShow Answer

Roberto deposited $66,000 in various individual accounts at his local credit union. He and his wife also have a joint savings account worth $54,700. What portion of these deposits is insured?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Historically, savings and loans always paid lower interest rates on time deposits.

Correct AnswerverifiedShow Answer

When the Federal Reserve acts to reduce inflation, they decrease the reserve requirement.

Correct AnswerverifiedShow Answer

A savings account is also known as a time deposit.

Correct AnswerverifiedShow Answer

The Federal Deposit Insurance Corporation (FDIC) operates as a(n)

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Describe and compare the three major types of organizations that make up the U.S. banking system: commercial banks, savings and loan associations, and credit unions.

Correct AnswerverifiedThe U.S. banking system consists primari...View AnswerShow Answer

The technical name for a savings account is a

Correct AnswerverifiedShow Answer

Banks help businesses operate in other countries by exchanging the currency of one nation for the currency of another.

Correct AnswerverifiedShow Answer

Alexander Hamilton persuaded Congress to create a central bank.

Correct AnswerverifiedShow Answer

The rate of interest charged by the Federal Reserve is called the federal funds rate.

Correct AnswerverifiedShow Answer

A time deposit that earns interest is a

Correct AnswerverifiedShow Answer

As a relatively poor nation, Forlornia wants to obtain funds for a project to improve the availability of water and electricity. Forlornia should contact the International Monetary Fund.

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

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The Federal Reserve System has three bas...
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The U.S. banking system consists primari...
View Answer

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