Question 1

Historically,savings and loans always paid lower interest rates on time deposits.

Accepted Answer

A) True 
 B)False

Question 2

Commercial banks attempt to profit by using funds deposited by customers to make interest-bearing loans to borrowers.

Accepted Answer

A) True 
 B)False

Question 3

Payroll debit cards:

Accepted Answer

A)   are protected if lost or stolen.
B)   have limited use because they can only act as a credit card,and the recipient does not have access to cash.
C)   must go through the Federal Reserve's Automated Clearing House system.
D)   can be issued to persons without bank accounts who can use it to pay bills online,or access cash from an ATM machine.E) B) and C)
F) None of the above

Question 4

Credit cards and debit cards eliminate the paper handling processes of using checks.

Accepted Answer

A) True 
 B)False

Question 5

Shana works as an investment specialist for the Teamsters Union Central States Pension Fund.Her job involves deciding how to invest the contributions paid into the fund.Which of the following statements about Shana's job are true?

Accepted Answer

A)   She works for a bank.
B)   She will probably invest most of the pension's funds in safe corporate stocks and other conservative investments such as government securities.
C)   In order to qualify for maximum tax benefits,the funds Shana invests all must be contributed by the companies who employ members of the Teamsters Union,rather than by the union members themselves.
D)   The purpose of the investments Shana is making is to increase the current pay of union members.E) All of the above
F) None of the above

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Originally,savings and loan associations:

Accepted Answer

A)   offered brokerage services to small investors.
B)   promoted consumer thrift and home ownership.
C)   acted as a fiscal agent for the federal government,and issued and redeemed U.S.savings bonds.
D)   handled the overflow of business from national and state banks.E) A) and D)
F) B) and D)

Question 8

Which of the following accurately presents a major difference between Internet banks and traditional banks?

Accepted Answer

A)   The government does not regulate Internet banks.
B)   Traditional banks are prohibited from having ATMs.
C)   Internet banks have lower overhead costs.
D)   Traditional banks offer less personal care and attention to customers.E) B) and C)
F) All of the above

Question 9

The U.S.production of the Sacagawea dollar coins provides greater durability than paper dollar bills.

Accepted Answer

A) True 
 B)False

Question 10

The theme of the Connecting Across Borders box titled,"Troubles Facing the World's Financial Watchdogs," reflects upon:

Accepted Answer

A)   The success the organizations have had in bringing us closer to an international monetary system.
B)   The dependency on the U.S.to fund most projects put forth by both of these international organizations.
C)   The rift that started between these two organizations that continues to go unsolved.Both organizations also suffer from internal problems that inhibit them from moving forward with organizational initiatives.
D)   New and ongoing economic issues around the world that present significant challenges for both organizations.E) B) and C)
F) B) and D)

Question 11

The Federal Reserve System was designed to prevent a repeat of the 1907 banking crisis.

Accepted Answer

A) True 
 B)False

Question 12

Chipper's Golf Resort is in the process of purchasing rare Kauri wood from New Zealand to be made into an impressive mantle on the fireplace of its new clubhouse.Before disbursing payment to the New Zealand dealer,the director of the construction project is concerned about the timeliness of delivery as well as the quality of the slab of wood once it is delivered.As the representative of Chipper's bank,you suggest that the Golf Resort sign a(n) :

Accepted Answer

A)   Authorization of Conditional Acceptance.
B)   Banker's Acceptance.
C)   Fair Exchange Certificate.
D)   Letter of Credit.E) B) and C)
F) B) and D)

Question 13

Fortunately,the Troubled Assets Relief Program (TARP)took care of the looming bankruptcy problems of major financial services institutions,and taxpayers were not hit with additional bailouts.

Accepted Answer

A) True 
 B)False

Question 14

When Mr.Smith in Quince Orchard,MD uses a check to buy a tractor from Mr.Brown in Austin,TX,__________ different banks are involved in the transaction.

Accepted Answer

A)   4
B)   12
C)   15
D)   noE) B) and D)
F) C) and D)

Question 15

The Fed plans to raise the discount rate to 6%.This indicates that:

Accepted Answer

A)   banks borrowing funds from the Fed will now pay 6% on the amount they borrow.
B)   banks must hold funds in their vault or on deposit with the Fed equal to at least 6% of their deposits.
C)   the Fed will pay 6% on any securities issued by the federal government during the current time period.
D)   the amount of money in circulation can be no more than 6% greater than the amount of gold held in reserve by the government.E) None of the above
F) B) and C)

Question 16

When comparing a letter of credit and a banker's acceptance for financing international business transactions,a letter of credit:

Accepted Answer

A)   provides payment anywhere in the world.A banker's acceptance pays in areas in which the bank has a branch.
B)   pays a specified amount if certain conditions are met.Conversely,a banker's acceptance represents an unconditional promise to pay.
C)   requires both the buyer and seller to deal in the same currencies.A banker's acceptance provides for currency exchange.
D)   provides financing directly between buyers and sellers in different countries.A banker's acceptance provides an arrangement in which a bank serves as a broker taking title to the goods.E) None of the above
F) C) and D)

Question 17

Abdul Industries wants to import some heavy machinery from a producer located in the Czech Republic.To facilitate payment to the Czech firm,Abdul arranged for its bank to issue a banker's acceptance.Under this arrangement,the bank pays the exporter after the equipment passes inspection.

Accepted Answer

A) True 
 B)False

Question 18

The ___________ plays a role in making certain that checks clear,and sellers get paid.

Accepted Answer

A)   National Check Register
B)   Federal Reserve System
C)   Uniform Commercial Check Processors
D)   paypal.com networkE) B) and C)
F) A) and C)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Bank crises tend to correlate with economic recessions.

Accepted Answer

A) True 
 B)False

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

Originally,savings and loan associations:

Correct Answer
verified

The Fed plans to raise the discount rate to 6%.This indicates that:

Correct Answer
verified

The U.S.production of the Sacagawea dollar coins provides greater durability than paper dollar bills.

Correct Answer
verified

Bank crises tend to correlate with economic recessions.

Correct Answer
verified

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

Correct Answer
verified

Shana works as an investment specialist for the Teamsters Union Central States Pension Fund.Her job involves deciding how to invest the contributions paid into the fund.Which of the following statements about Shana's job are true?

Correct Answer
verified

When Mr.Smith in Quince Orchard,MD uses a check to buy a tractor from Mr.Brown in Austin,TX,__________ different banks are involved in the transaction.

Correct Answer
verified

Which of the following accurately presents a major difference between Internet banks and traditional banks?

Correct Answer
verified

When comparing a letter of credit and a banker's acceptance for financing international business transactions,a letter of credit:

Correct Answer
verified

Payroll debit cards:

Correct Answer
verified

The Federal Reserve System was designed to prevent a repeat of the 1907 banking crisis.

Correct Answer
verified

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

Correct Answer
verified

Commercial banks attempt to profit by using funds deposited by customers to make interest-bearing loans to borrowers.

Correct Answer
verified

Abdul Industries wants to import some heavy machinery from a producer located in the Czech Republic.To facilitate payment to the Czech firm,Abdul arranged for its bank to issue a banker's acceptance.Under this arrangement,the bank pays the exporter after the equipment passes inspection.

Correct Answer
verified

Correct Answer
verified

The theme of the Connecting Across Borders box titled,"Troubles Facing the World's Financial Watchdogs," reflects upon:

Correct Answer
verified

The ___________ plays a role in making certain that checks clear,and sellers get paid.

Correct Answer
verified

Fortunately,the Troubled Assets Relief Program (TARP)took care of the looming bankruptcy problems of major financial services institutions,and taxpayers were not hit with additional bailouts.

Correct Answer
verified

Credit cards and debit cards eliminate the paper handling processes of using checks.

Correct Answer
verified

Historically,savings and loans always paid lower interest rates on time deposits.

Correct Answer
verified

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

Originally,savings and loan associations:

Correct AnswerverifiedShow Answer

The Fed plans to raise the discount rate to 6%.This indicates that:

Correct AnswerverifiedShow Answer

The U.S.production of the Sacagawea dollar coins provides greater durability than paper dollar bills.

Correct AnswerverifiedShow Answer

Bank crises tend to correlate with economic recessions.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Shana works as an investment specialist for the Teamsters Union Central States Pension Fund.Her job involves deciding how to invest the contributions paid into the fund.Which of the following statements about Shana's job are true?

Correct AnswerverifiedShow Answer

When Mr.Smith in Quince Orchard,MD uses a check to buy a tractor from Mr.Brown in Austin,TX,__________ different banks are involved in the transaction.

Correct AnswerverifiedShow Answer

Which of the following accurately presents a major difference between Internet banks and traditional banks?

Correct AnswerverifiedShow Answer

When comparing a letter of credit and a banker's acceptance for financing international business transactions,a letter of credit:

Correct AnswerverifiedShow Answer

Payroll debit cards:

Correct AnswerverifiedShow Answer

The Federal Reserve System was designed to prevent a repeat of the 1907 banking crisis.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Commercial banks attempt to profit by using funds deposited by customers to make interest-bearing loans to borrowers.

Correct AnswerverifiedShow Answer

Abdul Industries wants to import some heavy machinery from a producer located in the Czech Republic.To facilitate payment to the Czech firm,Abdul arranged for its bank to issue a banker's acceptance.Under this arrangement,the bank pays the exporter after the equipment passes inspection.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The theme of the Connecting Across Borders box titled,"Troubles Facing the World's Financial Watchdogs," reflects upon:

Correct AnswerverifiedShow Answer

The ___________ plays a role in making certain that checks clear,and sellers get paid.

Correct AnswerverifiedShow Answer

Fortunately,the Troubled Assets Relief Program (TARP)took care of the looming bankruptcy problems of major financial services institutions,and taxpayers were not hit with additional bailouts.

Correct AnswerverifiedShow Answer

Credit cards and debit cards eliminate the paper handling processes of using checks.

Correct AnswerverifiedShow Answer

Historically,savings and loans always paid lower interest rates on time deposits.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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