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

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Question 1

True/False

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Some automatic teller machines (ATMs) allow users to pick up concert tickets and download MP3 music files.

A) True
B) False

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True

Question 2

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The FDIC traditionally protects depositors up to $100,000 per account. Temporarily, the amount was increased to $250,000 per account through December 2009.

A) True
B) False

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Question 3

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According to the box titled, "Spotlight on Small Business" in Chapter 20, when small businesses need to obtain a loan, they will find that:

A savings and loan association (S&L) is a financial institution that accepts both savings and checking deposits and provides home mortgage loans.

A direct payment is a pre-authorized electronic payment.

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.

Chad travels extensively for his company. He stays at hotels that provide him with a(n) that is imbedded with his personal information as well as a code to unlock his hotel room.

Which of the following institutions monitors the monetary policies of member nations to ensure a global monetary system that works best for all nations?

Some financial services organizations lend money directly to corporations.

represents the most commonly used definition of the money supply.

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

The Fed commonly buys or sells U.S. government securities to regulate the money supply.

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

Which of the following represents the technical name for a checking account?

While credit cards increase the number of checks written, they lower the costs of processing those checks.

The board of governors of the Federal Reserve System determines:

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." -Patty supports a sustainability initiative at her bank 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 eliminates paperwork. She 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 .

Given the size and strength of the U.S. economy and the widespread use of the dollar, the Federal Reserve essentially regulates international monetary markets.

An increase in the discount rate produces a decrease in money supply.

Tracing the cause of the banking crisis of 2008-2009, which of the following organizations is not in the news as having been a contributor to the crisis?