Question 1

According to the Reaching Beyond our Borders box,titled,"The Banking Crisis Goes Global",China:

Accepted Answer

A)  is one of the only nations in the world that is unaffected by the 2008-2010 recession.
B)  is benefitting from the fact that its government demanded that Chinese banks continue to support small businesses with generous loans.It was a smart move because it saved many from going bankrupt.
C)  went to the IMF (International Monetary Fund) in pursuit of loans to continue to prop-up its small businesses.
D)  permitted banks (as in other nations) to operate independently from the government.Banks refused to lend to small businesses,resulting in several thousand going bankrupt in 2008.E) A) and B)
F) A) and C)

Question 2

Kimberly trades some of her homegrown tomatoes to her neighbor,Ron,for some green peppers fresh from Ron's garden.This type of trade represents an example of:

Accepted Answer

A)  barter.
B)  e-commerce.
C)  direct exchange.
D)  tax avoidance.E) A) and D)
F) A) and B)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

The Federal Reserve is the "bankers' bank."

Accepted Answer

A) True 
 B)False

Question 5

While credit cards increase the number of checks written,they lower the costs of processing those checks.

Accepted Answer

A) True 
 B)False

Question 6

If the Fed increases interest rates in the U.S.relative to other nations,

Accepted Answer

A)  foreign investors are likely to transfer funds to U.S.investments.
B)  foreign investors are likely to reduce their investment in U.S.securities.
C)  foreign governments will likely reduce their interest rates further,to remain complimentary to what the U.S.is doing.
D)  foreign investors will see this as a sign of a looming recession and redirect their funds to time deposits.E) A) and C)
F) A) and B)

Question 7

Many S&Ls failed when capital gains taxes increased in the late 70s and early 80s,making it less attractive to invest in real estate and causing investors to walk away from their property loans.

Accepted Answer

A) True 
 B)False

Question 8

The currencies of some countries,although durable and portable are relatively unstable,which makes international exchanges difficult.

Accepted Answer

A) True 
 B)False

Question 9

A savings account represents a demand deposit.

Accepted Answer

A) True 
 B)False

Question 10

A rapid increase in the money supply may lead to a(n) :

Accepted Answer

A)  increase in the rate of inflation.
B)  recession.
C)  decrease in interest rates.
D)  decrease in spending by consumers and businesses.E) A) and D)
F) B) and C)

Question 11

During the Civil War,gold and silver coins were hoarded not because of their currency value,but because they were worth more than currency.

Accepted Answer

A) True 
 B)False

Question 12

A __________ represents an agreement by a bank to pay a foreign company a given amount if certain conditions are met.

Accepted Answer

A)  certificate of deposit
B)  banker's acceptance
C)  callable option
D)  letter of creditE) B) and C)
F) C) and D)

Question 13

Critics of the World Bank charge the organization with:

Accepted Answer

A)  financially supporting the military of oppressive leaders.
B)  financing projects that damage the ecosystem.
C)  lending most of its money to poor nations.
D)  a wide array of computer security violations.E) C) and D)
F) A) and C)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

From a bank's point of view,debit cards and credit cards are treated in identical ways.

Accepted Answer

A) True 
 B)False

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) A) and B)
F) A) and C)

Question 17

The Federal Deposit Insurance Corporation (FDIC) operates as a(n) :

Accepted Answer

A)  department of the Federal Reserve System and sells insurance to mortgage holders.
B)  independent agency of the U.S.government,and sells insurance to banks.
C)  an arm of the Department of the Treasury.
D)  private nonprofit cooperative operated by member banks,offering insurance premiums for banking clients.E) None of the above
F) B) and C)

Question 18

To stimulate the economy during a recession,the Fed would:

Accepted Answer

A)  cut taxes.
B)  increase the discount rate.
C)  reduce the reserve requirement.
D)  sell government securities.E) A) and D)
F) B) and C)

Question 19

The President of the U.S appoints the members of the Federal Reserve's board of governors.

Accepted Answer

A) True 
 B)False

Question 20

__________ are nonprofit,member-owned financial cooperatives that offer a full variety of banking services such as accepting deposits and making loans.

Accepted Answer

A)  Mutual thrift associations
B)  Credit unions
C)  Commercial banks
D)  Mutual fund companiesE) A) and C)
F) A) and D)

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

A rapid increase in the money supply may lead to a(n) :

Correct AnswerverifiedShow Answer

The currencies of some countries,although durable and portable are relatively unstable,which makes international exchanges difficult.

Correct AnswerverifiedShow Answer

The Federal Deposit Insurance Corporation (FDIC) operates as a(n) :

Correct AnswerverifiedShow Answer

A __________ represents an agreement by a bank to pay a foreign company a given amount if certain conditions are met.

Correct AnswerverifiedShow Answer

From a bank's point of view,debit cards and credit cards are treated in identical ways.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Federal Reserve is the "bankers' bank."

Correct AnswerverifiedShow Answer

The President of the U.S appoints the members of the Federal Reserve's board of governors.

Correct AnswerverifiedShow Answer

Critics of the World Bank charge the organization with:

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

Kimberly trades some of her homegrown tomatoes to her neighbor,Ron,for some green peppers fresh from Ron's garden.This type of trade represents an example of:

Correct AnswerverifiedShow Answer

To stimulate the economy during a recession,the Fed would:

Correct AnswerverifiedShow Answer

While credit cards increase the number of checks written,they lower the costs of processing those checks.

Correct AnswerverifiedShow Answer

During the Civil War,gold and silver coins were hoarded not because of their currency value,but because they were worth more than currency.

Correct AnswerverifiedShow Answer

A savings account represents a demand deposit.

Correct AnswerverifiedShow Answer

According to the Reaching Beyond our Borders box,titled,"The Banking Crisis Goes Global",China:

Correct AnswerverifiedShow Answer

If the Fed increases interest rates in the U.S.relative to other nations,

Correct AnswerverifiedShow Answer

__________ are nonprofit,member-owned financial cooperatives that offer a full variety of banking services such as accepting deposits and making loans.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Many S&Ls failed when capital gains taxes increased in the late 70s and early 80s,making it less attractive to invest in real estate and causing investors to walk away from their property loans.

Correct AnswerverifiedShow 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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified