Question 1

The overall value of the U.S. M-2 has grown considerably since 1979 due primarily to the increased use of credit cards and debit cards.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following describes the requirements that the International Monetary Fund (IMF) has made on certain developing countries?

Accepted Answer

A)   The government decreases spending in order to bring inflation under control.
B)   Private industries decrease prices in order to bring inflation under control.
C)   The government increases loans in order to create more money in the local markets.
D)   The local banks increase loans in order to create more money in the local markets.
E)   The government and private industries partner in creating more jobs in the region.

Question 3

The Federal Reserve System has been instrumental in providing interbank clearing of electronic payments for the nation's financial institutions.

Accepted Answer

A) True 
 B)False

Question 4

A recent report to the House reveals that unemployment continues to be high and that the economy is sluggish. At the same time, the discount rate is very close to zero, and the reserve requirement for banks was recently lowered to an all-time low. What actions might the Federal Reserve System do in order to stimulate the economy?

Accepted Answer

Given the two main tools for controlling...

Question 5

Which of the following terms refers to the percentage of its deposits a bank must hold, in cash or on deposit, with a Federal Reserve bank?

Accepted Answer

A)   Discount rate
B)   Key rate
C)   Prime rate
D)   Federal insurance premium
E)   Reserve requirement

Question 6

Which of the following financial institutions earn profits from loans taken from the funds in each of its depositors' accounts?

Accepted Answer

A)   Securities investment firms
B)   Pension funds
C)   Credit unions
D)   Commercial banks
E)   Mutual savings banks

Question 7

Which of the following recent events represent the two most significant impacts on changes in the money and banking system since 2000?

Accepted Answer

A)   Government intervention to stabilize the U.S. financial system and stricter regulation of the mortgage industry
B)   Stricter regulation of the mortgage industry and the enactment of anti-terrorist policies
C)   The enactment of anti-terrorist policies and creation of the Federal Reserve System
D)   The rise of electronic technologies in banking and government intervention to stabilize the U.S. financial system
E)   Government intervention to stabilize the U.S. financial system and regulate the printing of money

Question 8

In the United States, who has the greatest influence on the value of the U.S. dollar?

Accepted Answer

A)   The World Bank
B)   The International Monetary Fund
C)   The Federal Reserve
D)   The European Central Bank
E)   The United Nations (U.N.)

Question 9

One of the daily responsibilities of the Federal Reserve System is to regulate the current federal funds rate.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following use a computer chip that sends a radio-frequency signal when an individual is making a retail purchase?

Accepted Answer

A)   Smart cards
B)   Blink cards
C)   Debit cards
D)   E-commerce cards
E)   Credit cards

Question 11

How are the individual Federal Reserve Banks organized?

Accepted Answer

A)   By size of financial institution members-small, medium, large, etc.
B)   By type of financial institution members-commercial banks, credit unions, etc.
C)   By geographical region-Southeast, Northeast, West, etc.
D)   By financial purpose-buying, lending, interest controlling, etc.
E)   By legislative districts-10th District of Massachusetts, 1st District of Colorado, etc.

Question 12

Which of the following statements BEST describes why U.S. Treasury securities have always been considered risk-free investments?

Accepted Answer

A)   They are backed by the U.S. government.
B)   They have a guaranteed rate of return.
C)   They are easily sold.
D)   They are readily available for purchase.
E)   They earn a great profit on the international money market.

Question 13

In mutual savings banks, all depositors are considered owners of the bank.

Accepted Answer

A) True 
 B)False

Question 14

In which way does the World Bank differ from true international banks?

Accepted Answer

A)   The World Bank does not charge interest to governments with emerging markets.
B)   The World Bank only provides funds for national improvements in order to increase international trade.
C)   The World Bank is comprised and run by a group of 150 member nations.
D)   The World Bank is designed to promote the stability of exchange rates among member nations.
E)   The World Bank only lends money to those with negative trade balances.

Question 15

Which of the following represents a pool of managed funds that provide retirement income for members?

Accepted Answer

A)   Insurance companies
B)   Finance companies
C)   Securities investment dealers
D)   Nondeposit institutions
E)   Pension funds

Question 16

Through the Federal Deposit Insurance Corporation, a deposit in a member bank is currently insured up to $50,000.

Accepted Answer

A) True 
 B)False

Question 17

Why are credit cards excluded from the measure of the nation's money supply?

Accepted Answer

A)   Because debt continues to accrue as the credit card is used
B)   Because money is not moved until the debt is paid
C)   Because there are few spending controls on credit cards
D)   Because credit cards represent a convenience, not a service
E)   Because only the interest paid on the credit card is considered liquid money

Question 18

The inquiry has discovered that the bank involved has been selling its riskiest mortgage accounts to the insurance company, which in turn has been selling these accounts packaged with other more stable loans at a sharply discounted price to other banks. Gavin asks his aides why this would be a beneficial relationship between the two institutions. What would his aides say?

Accepted Answer

By selling the risky loans out, the comm...

Question 19

Which of the following will allow for the transfer of money between accounts in order to allow an individual to make retail purchases, without increasing funds at the individual's disposal?

Accepted Answer

A)   Smart cards
B)   Blink cards
C)   Debit cards
D)   E-commerce cards
E)   Credit cards

Question 20

Over the past ten years, there has been increased belief that unethical behavior in the banking industry is the result of what?

Accepted Answer

A)   Increased social media use
B)   Corporate culture
C)   Increased regulation
D)   Stricter enforcement by the FDIC
E)   Increased stability of the industry

Exam 16: Understanding Money and the Role of Banking

Which of the following represents a pool of managed funds that provide retirement income for members?

Correct Answer
verified

The Federal Reserve System has been instrumental in providing interbank clearing of electronic payments for the nation's financial institutions.

Correct Answer
verified

Which of the following statements BEST describes why U.S. Treasury securities have always been considered risk-free investments?

Correct Answer
verified

Which of the following use a computer chip that sends a radio-frequency signal when an individual is making a retail purchase?

Correct Answer
verified

Which of the following recent events represent the two most significant impacts on changes in the money and banking system since 2000?

Correct Answer
verified

Which of the following terms refers to the percentage of its deposits a bank must hold, in cash or on deposit, with a Federal Reserve bank?

Correct Answer
verified

Correct Answer
verified
By selling the risky loans out, the comm...
View Answer

In which way does the World Bank differ from true international banks?

Correct Answer
verified

In the United States, who has the greatest influence on the value of the U.S. dollar?

Correct Answer
verified

Through the Federal Deposit Insurance Corporation, a deposit in a member bank is currently insured up to $50,000.

Correct Answer
verified

How are the individual Federal Reserve Banks organized?

Correct Answer
verified

Which of the following financial institutions earn profits from loans taken from the funds in each of its depositors' accounts?

Correct Answer
verified

Over the past ten years, there has been increased belief that unethical behavior in the banking industry is the result of what?

Correct Answer
verified

One of the daily responsibilities of the Federal Reserve System is to regulate the current federal funds rate.

Correct Answer
verified

Correct Answer
verified
Given the two main tools for controlling...
View Answer

Which of the following will allow for the transfer of money between accounts in order to allow an individual to make retail purchases, without increasing funds at the individual's disposal?

Correct Answer
verified

The overall value of the U.S. M-2 has grown considerably since 1979 due primarily to the increased use of credit cards and debit cards.

Correct Answer
verified

Which of the following describes the requirements that the International Monetary Fund (IMF) has made on certain developing countries?

Correct Answer
verified

In mutual savings banks, all depositors are considered owners of the bank.

Correct Answer
verified

Why are credit cards excluded from the measure of the nation's money supply?

Correct Answer
verified

Exam 16: Understanding Money and the Role of Banking

Which of the following represents a pool of managed funds that provide retirement income for members?

Correct AnswerverifiedShow Answer

The Federal Reserve System has been instrumental in providing interbank clearing of electronic payments for the nation's financial institutions.

Correct AnswerverifiedShow Answer

Which of the following statements BEST describes why U.S. Treasury securities have always been considered risk-free investments?

Correct AnswerverifiedShow Answer

Which of the following use a computer chip that sends a radio-frequency signal when an individual is making a retail purchase?

Correct AnswerverifiedShow Answer

Which of the following recent events represent the two most significant impacts on changes in the money and banking system since 2000?

Correct AnswerverifiedShow Answer

Which of the following terms refers to the percentage of its deposits a bank must hold, in cash or on deposit, with a Federal Reserve bank?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedBy selling the risky loans out, the comm...View AnswerShow Answer

In which way does the World Bank differ from true international banks?

Correct AnswerverifiedShow Answer

In the United States, who has the greatest influence on the value of the U.S. dollar?

Correct AnswerverifiedShow Answer

Through the Federal Deposit Insurance Corporation, a deposit in a member bank is currently insured up to $50,000.

Correct AnswerverifiedShow Answer

How are the individual Federal Reserve Banks organized?

Correct AnswerverifiedShow Answer

Which of the following financial institutions earn profits from loans taken from the funds in each of its depositors' accounts?

Correct AnswerverifiedShow Answer

Over the past ten years, there has been increased belief that unethical behavior in the banking industry is the result of what?

Correct AnswerverifiedShow Answer

One of the daily responsibilities of the Federal Reserve System is to regulate the current federal funds rate.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedGiven the two main tools for controlling...View AnswerShow Answer

Which of the following will allow for the transfer of money between accounts in order to allow an individual to make retail purchases, without increasing funds at the individual's disposal?

Correct AnswerverifiedShow Answer

The overall value of the U.S. M-2 has grown considerably since 1979 due primarily to the increased use of credit cards and debit cards.

Correct AnswerverifiedShow Answer

Which of the following describes the requirements that the International Monetary Fund (IMF) has made on certain developing countries?

Correct AnswerverifiedShow Answer

In mutual savings banks, all depositors are considered owners of the bank.

Correct AnswerverifiedShow Answer

Why are credit cards excluded from the measure of the nation's money supply?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
By selling the risky loans out, the comm...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Given the two main tools for controlling...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified