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

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Question 41

True/False

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According to the Spotlight on Small Business box, SoFi strives to branch out from student loan refinancing to become the bank of choice for Millennials.

A) True
B) False

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Question 42

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The M-3 includes M-1 money, but not M-2 money.

A) True
B) False

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Question 43

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

Credit unions are for-profit cooperatives.

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

Due to federal regulations limiting their investment opportunities, pension funds play a minor role in U.S. financial markets.

Early settlers of the New World relied heavily on barter because

Changes in the money supply produce little or no change in inflation, employment, and economic growth.

Hunter travels extensively on business. Most of the hotels where he stays provide him with a card that unlocks his room. The card is keyed to the particular lock that matches the lock on the assigned room and also contains Hunter's credit card information for other hotel purchases. The type of card that Hunter is using is a smart card.

Commercial banks offer services to depositors and borrowers.

Checking accounts that pay interest to depositors have experienced solid growth in recent years.

High start-up costs cause online banks, such as E*Trade Bank, to have higher operating costs than traditional banks.

Companies are now developing ways to send money across international boundaries using e-money.

The ________ provides the same results as a check because it withdraws funds from a checking account.

The Bank of Bramblewood promotes a sustainability initiative encouraging all transactions increasingly to be paperless. Each time the bank issues checks or sends out a paper statement, it includes a promotion asking customers to support methods that eliminate paperwork. The bank encourages customers to use debit cards, smart cards, direct deposit, and direct payments, as well as online statement retrieval. All of these tools are used in conjunction with the bank's

Erica has three types of deposits at her credit union. She has a checking account in her own name worth $42,000, a joint savings account with her husband, which currently holds $91,000, and an IRA account worth $145,000. Her deposits are at risk because they exceed the $250,000 limit on insurance coverage by NCUA.

Designed to create more confidence in banking institutions, the FDIC was established

After Xavier and Alyssa deposited nearly $55,000 in a savings account at Bigbux Bank, the bank failed and filed for bankruptcy. Because the Bigbux was an FDIC member bank, Xavier and Alyssa

When the value of the dollar increases relative to the euro, the number of U.S. dollars needed to purchase a block of Dutch cheese increases.

When the Fed increases the reserve requirement it forces banks to increase the number of loans they make.