Question 1

Traditionally, banks provide loans to individuals and companies according to the recipient's ______________

Accepted Answer

A)   future earnings potential
B)   family history
C)   volume of credit already established
D)   creditworthiness

Question 2

The strength of the U.S. money system rests on the silver content of the coins.

Accepted Answer

A) True 
 B)False

Question 3

Great news! The Fed just announced that the discount rate will rise by as much as 1% over the next three months. This will make it easier for Ben, the owner of a laser engraving business, to borrow money for that new piece of equipment he needs.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following helps to provide for the smooth flow of money between nations?

Accepted Answer

A)   International Monetary Fund
B)   Foreign Exchange Bank
C)   World Bank
D)   International Exchange Center

Question 5

Existing regulations prohibit online banking activities unless the bank also operates a traditional brick-and-mortar facility.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements most accurately represents the history of U.S. banking?

Accepted Answer

A)   Although many technological changes have occurred, and banks have grown tremendously in size, the basic structure of banking in the United States has survived since the Revolutionary War.
B)   A major trend in U.S. banking was a move from federal control during the 1800s and early 1900s to a system now controlled by individual states.
C)   Although the early history of banking in the United States was very chaotic, the establishment of the Fed stabilized the banking system.
D)   The U.S. banking system has experienced a great deal of change and instability throughout its history.

Question 7

When the Fed increases the discount rate, banks:

Accepted Answer

A)   must purchase more government securities.
B)   must pay a higher rate when they borrow from the Fed.
C)   will lower the rate they charge to borrowers.
D)   must hold a greater amount of funds in reserve against deposits.

Question 8

Commercial banks primarily serve two types of customers:

Accepted Answer

A)   depositors and borrowers.
B)   commercial clients and residential clients.
C)   secured creditors and unsecured creditors.
D)   short-term borrowers and long-term borrowers.

Question 9

The Federal Reserve System consists of ________ Federal Reserve banks

Accepted Answer

A)   5
B)   9
C)   12
D)   14

Question 10

A saving account is also known as a time deposit.

Accepted Answer

A) True 
 B)False

Question 11

By the time of the Civil War, the U.S. banking system operated:

Accepted Answer

A)   as an efficient model that many other countries copied.
B)   under the control of the first Federal Reserve System.
C)   inefficiently with different banks issuing different types of currencies.
D)   much the same as it does today.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

In the early 1800s, the United States allowed banks to issue different kinds of currencies.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A)   the Federal Reserve System.
B)   the gold standard for currency.
C)   the Comptroller of the currency.
D)   federal deposit insurance.

Question 15

The strength of the U.S. dollar depends on the strength of the U.S. economy relative to the economies of other nations.

Accepted Answer

A) True 
 B)False

Question 16

Thomas Jefferson proposed the establishment of the first central bank in the United States.

Accepted Answer

A) True 
 B)False

Question 17

The board of governors of the Federal Reserve System determines:

Accepted Answer

A)   exchange rates.
B)   U.S. monetary policy.
C)   inflows and outflows of gold reserves to ensure a stable money supply.
D)   how much money the U.S. will loan to foreign governments.

Question 18

A series of bank failures and a cash shortage in 1907 led to the establishment of the Federal Reserve System in 1913.

Accepted Answer

A) True 
 B)False

Question 19

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.

Question 20

The U.S. government's lack of regulation alone caused the banking crisis and collapse of banks that had been in business for several decades.

Accepted Answer

A) True 
 B)False

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

Which of the following statements most accurately represents the history of U.S. banking?

Correct AnswerverifiedShow Answer

The strength of the U.S. money system rests on the silver content of the coins.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A series of bank failures and a cash shortage in 1907 led to the establishment of the Federal Reserve System in 1913.

Correct AnswerverifiedShow Answer

Thomas Jefferson proposed the establishment of the first central bank in the United States.

Correct AnswerverifiedShow Answer

A saving account is also known as a time deposit.

Correct AnswerverifiedShow Answer

Commercial banks primarily serve two types of customers:

Correct AnswerverifiedShow Answer

The board of governors of the Federal Reserve System determines:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the early 1800s, the United States allowed banks to issue different kinds of currencies.

Correct AnswerverifiedShow Answer

The strength of the U.S. dollar depends on the strength of the U.S. economy relative to the economies of other nations.

Correct AnswerverifiedShow Answer

Traditionally, banks provide loans to individuals and companies according to the recipient's ______________

Correct AnswerverifiedShow Answer

When the Fed increases the discount rate, banks:

Correct AnswerverifiedShow Answer

By the time of the Civil War, the U.S. banking system operated:

Correct AnswerverifiedShow Answer

Great news! The Fed just announced that the discount rate will rise by as much as 1% over the next three months. This will make it easier for Ben, the owner of a laser engraving business, to borrow money for that new piece of equipment he needs.

Correct AnswerverifiedShow Answer

Which of the following helps to provide for the smooth flow of money between nations?

Correct AnswerverifiedShow Answer

Existing regulations prohibit online banking activities unless the bank also operates a traditional brick-and-mortar facility.

Correct AnswerverifiedShow Answer

The U.S. government's lack of regulation alone caused the banking crisis and collapse of banks that had been in business for several decades.

Correct AnswerverifiedShow Answer

The Federal Reserve System consists of ________ Federal Reserve banks

Correct AnswerverifiedShow Answer

The problem with bartering is:

Correct AnswerverifiedShow Answer

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