Question 1

On payday,employers can designate their banks to electronically transfer funds from the business' checking account to the employees' checking account.This represents an example of a(n) :

Accepted Answer

A)   debit card system.
B)   check kiting system.
C)   electronic check conversion.
D)   direct deposit.E) None of the above
F) B) and D)

Question 2

Springfield National Bank holds $200 million in deposits from their customers.If the Fed sets the reserve requirement at 12 percent,Springfield must hold $24 million in cash at the bank or in non-interest-bearing deposits at the local Federal Reserve district bank.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following represent an independent agency of the U.S.government that insures bank deposits?

Accepted Answer

A)   National Deposit Assurance Cooperative
B)   Federal Deposit Insurance Corporation
C)   Insurance Corporation of America
D)   Deposit Protection FundE) B) and D)
F) All of the above

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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

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) All of the above
F) B) and D)

Question 8

When the Fed sells U.S.government securities,the U.S.money supply increases.

Accepted Answer

A) True 
 B)False

Question 9

Historically,coins and paper money complicated the exchange process.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not included in the M-1 or M-2 definitions of the money supply?

Accepted Answer

A)   Savings account deposits
B)   Gold
C)   Checking account deposits
D)   CurrencyE) A) and B)
F) B) and D)

Question 11

During the early 1980s,the federal government responded to the severe problems plaguing savings and loan associations by:

Accepted Answer

A)   allowing S&Ls to offer a variety of financial services that made them more like commercial banks.
B)   nationalizing the savings and loan industry,including more regulations.
C)   providing interest-free loans to S&Ls who were short on reserves.
D)   declaring a moratorium on S&L debt payments,and limiting the amount of funds depositors could withdraw from a S&L in any given 24-hour perioD.E) B) and D)
F) All of the above

Question 12

Nonbanks accept deposits,but do not offer lending services,brokerage services,or insurance services.

Accepted Answer

A) True 
 B)False

Question 13

Because they charge higher interest rates,commercial and consumer finance companies often fail to attract borrowers.

Accepted Answer

A) True 
 B)False

Question 14

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)   an arm of the Department of the Treasury.
D)   private nonprofit cooperative operated by member banks,offering insurance premiums for banking clients.E) A) and B)
F) A) and C)

Question 15

Commercial banks primarily serve two types of customers:

Accepted Answer

A)   depositors and borrowers.
B)   commercial clients and residential clients.
C)   secured creditors and unsecured creditors.
D)   short-term borrowers and long-term borrowers.E) A) and D)
F) B) and C)

Question 16

The IMF's goal is to maintain a global monetary system.

Accepted Answer

A) True 
 B)False

Question 17

The World Bank primarily finances projects to improve the productivity and standard of living in less-developed nations.

Accepted Answer

A) True 
 B)False

Question 18

As a response to a rise in savings and loan failures,the federal government no longer insures holders of accounts in savings and loan associations.

Accepted Answer

A) True 
 B)False

Question 19

When the U.S.was still a colony of Great Britain,land banks were created to lend money to farmers.

Accepted Answer

A) True 
 B)False

Question 20

__________ currently provides for regulating international banking and finance practices.

Accepted Answer

A)   The Federal Reserve System
B)   The World Bank
C)   The International Monetary Fund
D)   No organizationE) None of the above
F) C) and D)

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

Because they charge higher interest rates,commercial and consumer finance companies often fail to attract borrowers.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is not included in the M-1 or M-2 definitions of the money supply?

Correct AnswerverifiedShow Answer

Which of the following represent an independent agency of the U.S.government that insures bank deposits?

Correct AnswerverifiedShow Answer

Historically,coins and paper money complicated the exchange process.

Correct AnswerverifiedShow Answer

During the early 1980s,the federal government responded to the severe problems plaguing savings and loan associations by:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

__________ currently provides for regulating international banking and finance practices.

Correct AnswerverifiedShow Answer

Springfield National Bank holds $200 million in deposits from their customers.If the Fed sets the reserve requirement at 12 percent,Springfield must hold $24 million in cash at the bank or in non-interest-bearing deposits at the local Federal Reserve district bank.

Correct AnswerverifiedShow Answer

As a response to a rise in savings and loan failures,the federal government no longer insures holders of accounts in savings and loan associations.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Commercial banks primarily serve two types of customers:

Correct AnswerverifiedShow Answer

When the U.S.was still a colony of Great Britain,land banks were created to lend money to farmers.

Correct AnswerverifiedShow Answer

When the Fed sells U.S.government securities,the U.S.money supply increases.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The World Bank primarily finances projects to improve the productivity and standard of living in less-developed nations.

Correct AnswerverifiedShow Answer

On payday,employers can designate their banks to electronically transfer funds from the business' checking account to the employees' checking account.This represents an example of a(n) :

Correct AnswerverifiedShow Answer

Nonbanks accept deposits,but do not offer lending services,brokerage services,or insurance services.

Correct AnswerverifiedShow Answer

The IMF's goal is to maintain a global monetary system.

Correct AnswerverifiedShow Answer

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