Question 1

Cory worries that his $7,537 in a checking account at the Lottadoe National Bank could be lost if the bank fails.Lottadoe is a FDIC (Federal Deposit Insurance Corporation)member bank,which insures Cory's account up to $250,000.

Accepted Answer

A) True 
 B)False

Question 2

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) A) and C)
F) C) and D)

Question 3

When a customer purchases an item with a debit card:

Accepted Answer

A)   they actually are taking out a short-term loan with 30 days to pay before any interest is charged.
B)   the payment flows first through an electronic clearinghouse which then sends the customer a bill.
C)   the transaction duplicates the process of a credit card.
D)   the funds are automatically transferred from the customer's account to the store's account.E) All of the above
F) B) and C)

Question 4

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

Accepted Answer

A)   Currency
B)   Checking account deposits
C)   Traveler's checks
D)   Savings account depositsE) A) and B)
F) A) and D) D

Question 5

Prior to the establishment of the Federal Reserve System in 1913,the United States had no experience with a central bank.

Accepted Answer

A) True 
 B)False

Question 6

The FDIC traditionally protects depositors up to $250,000 per account.

Accepted Answer

A) True 
 B)False

Question 7

The problem with bartering is:

Accepted Answer

A)   one person in the trade does not feel he/she got a fair shake.
B)   there is a significant amount of corruption in the process,and things get stolen before they are traded.
C)   it is not an easy process,and often cumbersome to carry goods to the place of trade.
D)   it has no place in today's international trading operations.E) B) and C)
F) A) and B)

Question 8

The International Monetary Fund assists with the smooth flow of money among nations.

Accepted Answer

A) True 
 B)False  True

Question 9

Some financial services organizations lend money directly to corporations.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)   The International Monetary Fund
B)   The World Bank
C)   The International Development Administration
D)   The International Reserve BankE) A) and C)
F) None of the above

Question 11

Today,a regular _____________ is a system where you can exchange goods for other goods.You submit your goods and you receive trade credit that you can use to buy other goods.

Accepted Answer

A)   world market
B)   barter exchange
C)   world trade center
D)   trading postE) A) and B)
F) A) and C)

Question 12

News reports indicate that the Fed plans to announce its third increase in the discount rate in the past five months.Additional reports suggest that the Fed may also increase the reserve requirement in the near future.Apparently the Fed perceives the number one problem facing the economy is:

Accepted Answer

A)   the size of the federal deficit.
B)   unemployment.
C)   excessively high interest rates.
D)   inflation.E) None of the above
F) A) and B) D

Question 13

The ___________ rate represents the interest rate charged by the Fed when loaning funds to member banks.

Accepted Answer

A)   discount
B)   prime
C)   federal funds
D)   reserveE) B) and D)
F) C) and D)

Question 14

The people living on the island nation of Wacki-ki readily accept a certain type of seashell as payment for the goods and services they trade.For Wackians (the name of Wacki-ki natives),seashells serve as money.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements best summarizes the difference between M-1 and M-2?

Accepted Answer

A)   The M-1 definition of the money supply considers only domestic currencies while the M-2 definition includes foreign currencies.
B)   The M-1 definition consists of "hard" currencies which are backed by gold and silver,while M-2 consists of "soft" currencies which are not backed by gold and silver.
C)   The M-2 definition includes everything in the M-1 definition,plus additional components such as money in savings accounts,money market accounts,and certificates of deposit.
D)   The M-1 money supply consists only of the currency (coins and paper money) that circulates in our economy,while the M-2 includes traveler's checks and funds in demand deposits.E) None of the above
F) All of the above

Question 16

The Federal Reserve consists of seven Federal Reserve districts.

Accepted Answer

A) True 
 B)False

Question 17

The ability to access funds without a penalty helps to explain why certificates of deposit (CDs)have gained popularity among conservative investors and savers.

Accepted Answer

A) True 
 B)False

Question 18

When the value of the dollar falls,foreign goods become less expensive for American consumers.

Accepted Answer

A) True 
 B)False

Question 19

The community college where Jake works requires all employees to contribute to a pension fund.At this time,he is not too worried about the safety of this contribution because:

Accepted Answer

A)   the pensions fund's investments are always backed by the full faith and credit of the U.S.government.
B)   pension funds are provided by nonbanks so they are not going to take this money and lend it to others.
C)   he is considered a state employee,and as such,he is protected from this fund going bankrupt.
D)   pension funds usually make conservative investments.E) All of the above
F) B) and C)

Question 20

By the time of the Civil War,the efficient banking system of the United States was the envy of the rest of the world.

Accepted Answer

A) True 
 B)False

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

Cory worries that his $7,537 in a checking account at the Lottadoe National Bank could be lost if the bank fails.Lottadoe is a FDIC (Federal Deposit Insurance Corporation)member bank,which insures Cory's account up to $250,000.

Correct AnswerverifiedShow Answer

The technical name for a savings account is a:

Correct AnswerverifiedShow Answer

When a customer purchases an item with a debit card:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedD

Prior to the establishment of the Federal Reserve System in 1913,the United States had no experience with a central bank.

Correct AnswerverifiedShow Answer

The FDIC traditionally protects depositors up to $250,000 per account.

Correct AnswerverifiedShow Answer

The problem with bartering is:

Correct AnswerverifiedShow Answer

The International Monetary Fund assists with the smooth flow of money among nations.

Correct AnswerverifiedTrue

Some financial services organizations lend money directly to corporations.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Today,a regular _____________ is a system where you can exchange goods for other goods.You submit your goods and you receive trade credit that you can use to buy other goods.

Correct AnswerverifiedShow Answer

News reports indicate that the Fed plans to announce its third increase in the discount rate in the past five months.Additional reports suggest that the Fed may also increase the reserve requirement in the near future.Apparently the Fed perceives the number one problem facing the economy is:

Correct AnswerverifiedD

The ___________ rate represents the interest rate charged by the Fed when loaning funds to member banks.

Correct AnswerverifiedShow Answer

The people living on the island nation of Wacki-ki readily accept a certain type of seashell as payment for the goods and services they trade.For Wackians (the name of Wacki-ki natives),seashells serve as money.

Correct AnswerverifiedShow Answer

Which of the following statements best summarizes the difference between M-1 and M-2?

Correct AnswerverifiedShow Answer

The Federal Reserve consists of seven Federal Reserve districts.

Correct AnswerverifiedShow Answer

The ability to access funds without a penalty helps to explain why certificates of deposit (CDs)have gained popularity among conservative investors and savers.

Correct AnswerverifiedShow Answer

When the value of the dollar falls,foreign goods become less expensive for American consumers.

Correct AnswerverifiedShow Answer

The community college where Jake works requires all employees to contribute to a pension fund.At this time,he is not too worried about the safety of this contribution because:

Correct AnswerverifiedShow Answer

By the time of the Civil War,the efficient banking system of the United States was the envy of the rest of the world.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified