Question 1

Banks are regulated because they provide several important services to their local and national economies.

Accepted Answer

A) True 
 B)False

Question 2

A fractional reserve banking system might be in trouble if

Accepted Answer

A)   one depositor wanted his (her) money returned.
B)   one borrowing customer paid off the loan.
C)   all borrowing customers paid off their loans.
D)   all deposit customers wanted to withdraw their money.
E)   None of the above.

Question 3

Federal deposit insurance has prevented widespread bank failures and panics.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following powers or tools of Federal Reserve monetary policy has the greatest impact on the money supply?

Accepted Answer

A)   discount rate
B)   Regulation Q
C)   open market operations
D)   bank examination
E)   All of the above have about the same impact.

Question 5

An increase in depository institutions' reserves will cause

Accepted Answer

A)   the Fed Funds rate to rise.
B)   planned inventory investment to fall.
C)   depository institutions to lend more freely.
D)   foreign investors to buy more T-Bills.
E)   None of the above.

Question 6

U.S.bank regulators allow U.S.banks overseas to engage in all banking activities allowed by the host country.

Accepted Answer

A) True 
 B)False

Question 7

All of the following are reasons to regulate depository institutions except

Accepted Answer

A)   to promote safety and soundness.
B)   to affect the structure of banking.
C)   to make sure banks' earnings are competitive with other financial institutions.
D)   to protect the interest of consumers.
E)   None of the above.

Question 8

Each of the following is classified as a thrift financial institution,except

Accepted Answer

A)   commercial bank.
B)   savings and loan association.
C)   savings bank.
D)   credit union.
E)   All of the above are thrift institutions.

Question 9

The percentage of financial assets held by individuals located in banks has doubled over the past thirty-five years.

Accepted Answer

A) True 
 B)False

Question 10

Mutual funds that invest primarily in instruments that generate fairly constant annual cash flows such as bonds and preferred stocks are ____.

Accepted Answer

A)   income funds
B)   growth funds
C)   value funds
D)   money market funds
E)   social funds

Question 11

Which of the following is not a benefit associated with financial intermediaries?

Accepted Answer

A)   reduced costs
B)   fund indivisibility
C)   financial flexibility
D)   diversification of risk

Question 12

Pension funds whose contributions are not large enough to actually cover the benefits to be paid out when all employees retire are termed

Accepted Answer

A)   divested.
B)   vested.
C)   unfunded,or underfunded.
D)   funded.
E)   None of the above.

Question 13

The Federal Open Market Committee basically establishes our nation's monetary policy.

Accepted Answer

A) True 
 B)False

Question 14

The largest amount of pension assets are associated with

Accepted Answer

A)   private pension funds.
B)   social security.
C)   government-administered pension funds.
D)   insured pension plans with life insurance companies.
E)   None of the above.

Question 15

Federal deposit insurance has prevented the failure of depository institutions.

Accepted Answer

A) True 
 B)False

Question 16

Suppose the Federal Reserve increases deposits at financial institutions by $50 billion through its open market operations.If the reserve requirement for all deposits is increased from 8% to 10% at the same time the Fed increases deposits,what is the maximum impact the Fed's actions can have on total deposits?

Accepted Answer

A)   $575 billion increase
B)   $450 billion increase
C)   $2.5 trillion increase
D)   Actually,deposits would decrease,but there is not enough information to determine by what amount.
E)   None of the above.

Question 17

The major asset of savings and loans is

Accepted Answer

A)   mortgage-backed securities.
B)   construction loans.
C)   residential (home) mortgages.
D)   cash and investment accounts.
E)   government securities.

Question 18

Financial intermediaries are the end users of the funds that they get from those who wish save money for the future.

Accepted Answer

A) True 
 B)False

Question 19

The major federal regulator of mutual funds is the

Accepted Answer

A)   Federal Deposit Insurance Corporation.
B)   Federal Trade Commission.
C)   Federal Reserve System.
D)   Securities and Exchange Commission.
E)   None of the above.

Question 20

The maximum change in the money supply created by a fractional reserve banking system decreases whenever reserve requirements are increased.

Accepted Answer

A) True 
 B)False

Exam 4: Financial Intermediaries and the Banking System

Federal deposit insurance has prevented the failure of depository institutions.

Correct Answer
verified

The major federal regulator of mutual funds is the

Correct Answer
verified

All of the following are reasons to regulate depository institutions except

Correct Answer
verified

Which of the following powers or tools of Federal Reserve monetary policy has the greatest impact on the money supply?

Correct Answer
verified

Pension funds whose contributions are not large enough to actually cover the benefits to be paid out when all employees retire are termed

Correct Answer
verified

The percentage of financial assets held by individuals located in banks has doubled over the past thirty-five years.

Correct Answer
verified

Correct Answer
verified

The maximum change in the money supply created by a fractional reserve banking system decreases whenever reserve requirements are increased.

Correct Answer
verified

U.S.bank regulators allow U.S.banks overseas to engage in all banking activities allowed by the host country.

Correct Answer
verified

Which of the following is not a benefit associated with financial intermediaries?

Correct Answer
verified

A fractional reserve banking system might be in trouble if

Correct Answer
verified

Federal deposit insurance has prevented widespread bank failures and panics.

Correct Answer
verified

Banks are regulated because they provide several important services to their local and national economies.

Correct Answer
verified

Financial intermediaries are the end users of the funds that they get from those who wish save money for the future.

Correct Answer
verified

Mutual funds that invest primarily in instruments that generate fairly constant annual cash flows such as bonds and preferred stocks are ____.

Correct Answer
verified

The Federal Open Market Committee basically establishes our nation's monetary policy.

Correct Answer
verified

An increase in depository institutions' reserves will cause

Correct Answer
verified

Each of the following is classified as a thrift financial institution,except

Correct Answer
verified

The largest amount of pension assets are associated with

Correct Answer
verified

The major asset of savings and loans is

Correct Answer
verified

Exam 4: Financial Intermediaries and the Banking System

Federal deposit insurance has prevented the failure of depository institutions.

Correct AnswerverifiedShow Answer

The major federal regulator of mutual funds is the

Correct AnswerverifiedShow Answer

All of the following are reasons to regulate depository institutions except

Correct AnswerverifiedShow Answer

Which of the following powers or tools of Federal Reserve monetary policy has the greatest impact on the money supply?

Correct AnswerverifiedShow Answer

Pension funds whose contributions are not large enough to actually cover the benefits to be paid out when all employees retire are termed

Correct AnswerverifiedShow Answer

The percentage of financial assets held by individuals located in banks has doubled over the past thirty-five years.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The maximum change in the money supply created by a fractional reserve banking system decreases whenever reserve requirements are increased.

Correct AnswerverifiedShow Answer

U.S.bank regulators allow U.S.banks overseas to engage in all banking activities allowed by the host country.

Correct AnswerverifiedShow Answer

Which of the following is not a benefit associated with financial intermediaries?

Correct AnswerverifiedShow Answer

A fractional reserve banking system might be in trouble if

Correct AnswerverifiedShow Answer

Federal deposit insurance has prevented widespread bank failures and panics.

Correct AnswerverifiedShow Answer

Banks are regulated because they provide several important services to their local and national economies.

Correct AnswerverifiedShow Answer

Financial intermediaries are the end users of the funds that they get from those who wish save money for the future.

Correct AnswerverifiedShow Answer

Mutual funds that invest primarily in instruments that generate fairly constant annual cash flows such as bonds and preferred stocks are ____.

Correct AnswerverifiedShow Answer

The Federal Open Market Committee basically establishes our nation's monetary policy.

Correct AnswerverifiedShow Answer

An increase in depository institutions' reserves will cause

Correct AnswerverifiedShow Answer

Each of the following is classified as a thrift financial institution,except

Correct AnswerverifiedShow Answer

The largest amount of pension assets are associated with

Correct AnswerverifiedShow Answer

The major asset of savings and loans is

Correct AnswerverifiedShow Answer

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