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

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Question 121

True/False

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International bankers make loans wherever they can get the maximum return for their money.

A) True
B) False

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Question 122

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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." -During Red's time as head of the Bank of Bramblewood,the bank offered three services: time deposits,demand deposits,and home and business loans.Under Patty's leadership,the bank offers those services,a variety of investment opportunities such as mutual funds and bonds,and they are set-up to provide ___________ through the Internet which may involve a number of services such as paying bills directly from one's account,or transferring money from one account to another.

A) demand deposits II
B) online banking
C) passbook banking
D) composite banking

E) None of the above
F) A) and B)

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Question 123

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Coins and bills are portable and durable.

Although there are many new ways to perform electronic funds transfer,legally,the only way that an employer can pay an employee is by writing a check.

Chipper's Golf Resort plans to carry an inventory of golf clubs - irons,drivers,and woods from a German manufacturer.The manufacturer has promised delivery in four weeks,which will be just in time for the beginning of Chipper's golf season at its Chicago course.In order to prudently watch cash flow,you have recommended that Chipper's Resort sign a letter of credit with an international bank asking the bank to disburse payment when the clubs arrive at the Chicago course and after they are inspected.

A more recent product of banks is checking accounts that pay interest to depositors.

First Data Corporation has developed the GO-Tag,where:

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

Commercial and consumer finance companies specialize in making low interest loans to individuals and businesses with strong credit ratings.

The Federal Reserve that was established in 1907 was to be a "lender of last resort," loans money to small businesses that are unable to obtain loans through private banks.

The National Credit Union Administration provides coverage up to $250,000 per individual depositor at each credit union.

Savings and loan associations are sometimes known as:

One of the most important aspects of the banking legislation passed during the 1930s established:

A(n) __________ allows money to be exchanged electronically more quickly and more economically than with paper checks.

During the Civil War,gold and silver coins were hoarded not because of their currency value,but because they were worth more than currency.

When the value of the euro increases compared to the U.S.dollar,the price of U.S.exports to Europe will decrease.

Under the Federal Reserve Act of 1913:

The United States first established a central bank in 1913 by establishing the Federal Reserve System.

A significant decrease in the money supply tends to:

Thanks in part to the Federal Reserve System,few banks failed during the Great Depression.