Question 1

In the current U.S. economy, who plays the role of lender of last resort?

Accepted Answer

A) The Securities and Exchange Commission 
B) The Federal Deposit Insurance Corporation 
C) The Federal Reserve System 
D) The Social Security Administration 
A) The Securities and Exchange Commission 
B) The Federal Deposit Insurance Corporation 
C) The Federal Reserve System 
D) The Social Security Administration

Question 2

Where do the FDIC's funds come from?

Accepted Answer

A) Congress appropriates money for the FDIC, just as it does for other federal agencies. 
B) The FDIC earns income through the insurance premiums paid by insured banks and from investment earnings. 
C) The FDIC sells bonds in the financial markets. 
D) The FDIC relies on voluntary contributions from the banking community. 
A) Congress appropriates money for the FDIC, just as it does for other federal agencies. 
B) The FDIC earns income through the insurance premiums paid by insured banks and from investment earnings. 
C) The FDIC sells bonds in the financial markets. 
D) The FDIC relies on voluntary contributions from the banking community.

Question 3

Most federal credit unions are chartered and regulated by the

Accepted Answer

A) Office of Thrift Supervision. 
B) National Credit Union Administration. 
C) Office of the Comptroller of the Currency. 
D) Federal Reserve System. 
A) Office of Thrift Supervision. 
B) National Credit Union Administration. 
C) Office of the Comptroller of the Currency. 
D) Federal Reserve System.

Question 4

As of 2006, about how many banks were there in the United States?

Accepted Answer

A) 57 
B) 2000 
C) 7500 
D) 14,000 
A) 57 
B) 2000 
C) 7500 
D) 14,000

Question 5

The underlying problem that may lead to runs on solvent banks is

Accepted Answer

A) irresponsible reporting by the news media. 
B) excessive regulation of banks by the government. 
C) excessive gullibility on the part of the public. 
D) private information about banks' loan portfolios. 
A) irresponsible reporting by the news media. 
B) excessive regulation of banks by the government. 
C) excessive gullibility on the part of the public. 
D) private information about banks' loan portfolios.

Question 6

As a result of the McFadden Act,

Accepted Answer

A) deposits in state chartered banks receive federal deposit insurance protection. 
B) there are a larger number of banking firms in the United States than there would have been otherwise. 
C) only state chartered banks are allowed to offer demand deposits. 
D) bank credit card interest rates are regulated at the federal level. 
A) deposits in state chartered banks receive federal deposit insurance protection. 
B) there are a larger number of banking firms in the United States than there would have been otherwise. 
C) only state chartered banks are allowed to offer demand deposits. 
D) bank credit card interest rates are regulated at the federal level.

Question 7

What percentage of commercial bank deposits are held by bank holding companies?

Accepted Answer

A) 5% 
B) 25% 
C) 75% 
D) 90% 
A) 5% 
B) 25% 
C) 75% 
D) 90%

Question 8

The fact that capital-asset ratios in the banking industry are today at about half their level of 1930 is best explained by the

Accepted Answer

A) existence of deposit insurance. 
B) wider range of good investments available to bank managers today. 
C) fact that the value of bank assets has not increased as fast as the value of bank capital. 
D) absence of federal regulation. 
A) existence of deposit insurance. 
B) wider range of good investments available to bank managers today. 
C) fact that the value of bank assets has not increased as fast as the value of bank capital. 
D) absence of federal regulation.

Question 9

Which of the following statements about branching restrictions on banks is true?

Accepted Answer

A) Restrictions on branching are much weaker currently than they were in the 1970s. 
B) Several large banks now have branches in every state. 
C) Restrictions on branching are greater currently than they were in the mid-1970s. 
D) Superregional banks exist only in the West. 
A) Restrictions on branching are much weaker currently than they were in the 1970s. 
B) Several large banks now have branches in every state. 
C) Restrictions on branching are greater currently than they were in the mid-1970s. 
D) Superregional banks exist only in the West.

Question 10

The most important reason for federal government concern about the health of the banking industry is that

Accepted Answer

A) banks are the primary market for government bonds. 
B) banks are of great importance in reducing information costs in the financial system. 
C) many Americans receive a substantial part of their income as interest on bank deposits. 
D) banks employ a substantial number of people. 
A) banks are the primary market for government bonds. 
B) banks are of great importance in reducing information costs in the financial system. 
C) many Americans receive a substantial part of their income as interest on bank deposits. 
D) banks employ a substantial number of people.

Question 11

Federally chartered savings institutions are supervised by the

Accepted Answer

A) Office of Thrift Supervision. 
B) Securities and Exchange Commission. 
C) Office of the Comptroller of the Currency. 
D) Federal Reserve System. 
A) Office of Thrift Supervision. 
B) Securities and Exchange Commission. 
C) Office of the Comptroller of the Currency. 
D) Federal Reserve System.

Question 12

By 2006, what share of U.S. assets were held by the 10 largest banks in the United States?

Accepted Answer

A) 0.9% 
B) 29% 
C) 49% 
D) 68% 
A) 0.9% 
B) 29% 
C) 49% 
D) 68%

Question 13

The Fed's role as lender of last resort

Accepted Answer

A) has been taken over by the FDIC. 
B) has been expanded to include ensuring general financial stability. 
C) was eliminated by the Banking Reform Act of 1995. 
D) has remained unchanged since 1913. 
A) has been taken over by the FDIC. 
B) has been expanded to include ensuring general financial stability. 
C) was eliminated by the Banking Reform Act of 1995. 
D) has remained unchanged since 1913.

Question 14

If you have $2 million in a CD at a commercial bank that is a member of the FDIC, how much of your funds are uninsured?

Accepted Answer

A) $0 
B) $1 million 
C) $1.9 million 
D) $2 million 
A) $0 
B) $1 million 
C) $1.9 million 
D) $2 million

Question 15

When was the National Banking Period?

Accepted Answer

A) 1836-1863 
B) 1863-1913 
C) 1913-1934 
D) 1934-1990 
A) 1836-1863 
B) 1863-1913 
C) 1913-1934 
D) 1934-1990

Question 16

What are federally chartered banks called?

Accepted Answer

A) Federal banks 
B) Federal Reserve banks 
C) National banks 
D) Central banks 
A) Federal banks 
B) Federal Reserve banks 
C) National banks 
D) Central banks

Question 17

For Japanese firms, since 1980 the share of external funds raised by bank borrowing has

Accepted Answer

A) fallen. 
B) risen. 
C) remained the same. 
D) risen until 1985 and fallen after 1985. 
A) fallen. 
B) risen. 
C) remained the same. 
D) risen until 1985 and fallen after 1985.

Question 18

Banks are exposed to interest rate risk primarily because

Accepted Answer

A) interest rates are very difficult to forecast. 
B) the maturities of banks' assets and liabilities differ. 
C) borrowers from banks are prone to default. 
D) depositors are always searching for a slightly higher interest rate. 
A) interest rates are very difficult to forecast. 
B) the maturities of banks' assets and liabilities differ. 
C) borrowers from banks are prone to default. 
D) depositors are always searching for a slightly higher interest rate.

Question 19

What percentage of bank depositors are fully covered by federal deposit insurance?

Accepted Answer

A) 1% 
B) 5% 
C) 99% 
D) 100% 
A) 1% 
B) 5% 
C) 99% 
D) 100%

Question 20

The Glass-Steagall Act of 1933

Accepted Answer

A) prohibited branching across state lines. 
B) separated commercial banking from investment banking. 
C) forbade the opening of nonbank banks. 
D) made bank holding companies illegal. 
A) prohibited branching across state lines. 
B) separated commercial banking from investment banking. 
C) forbade the opening of nonbank banks. 
D) made bank holding companies illegal.

Exam 14: The Banking Industry

In the current U.S. economy, who plays the role of lender of last resort?

Where do the FDIC's funds come from?

Most federal credit unions are chartered and regulated by the

As of 2006, about how many banks were there in the United States?

The underlying problem that may lead to runs on solvent banks is

As a result of the McFadden Act,

What percentage of commercial bank deposits are held by bank holding companies?

The fact that capital-asset ratios in the banking industry are today at about half their level of 1930 is best explained by the

Which of the following statements about branching restrictions on banks is true?

The most important reason for federal government concern about the health of the banking industry is that

Federally chartered savings institutions are supervised by the

By 2006, what share of U.S. assets were held by the 10 largest banks in the United States?

The Fed's role as lender of last resort

If you have $2 million in a CD at a commercial bank that is a member of the FDIC, how much of your funds are uninsured?

When was the National Banking Period?

What are federally chartered banks called?

For Japanese firms, since 1980 the share of external funds raised by bank borrowing has

Banks are exposed to interest rate risk primarily because

What percentage of bank depositors are fully covered by federal deposit insurance?

The Glass-Steagall Act of 1933

Introducing Money and the Financial System

Money and the Payments System

Overview of the Financial System

Interest Rates and Rates of Return

The Theory of Portfolio Allocation

Determining Market Interest Rates

Risk Structure and Term Structure of Interest Rates

The Foreign-Exchange Market and Exchange Rates

Derivative Securities and Derivative Markets

Information and Financial Market Efficiency

Reducing Transactions Costs and Information Costs

What Financial Institutions Do

The Business of Banking

Banking Regulation: Crisis and Response

Banking in the International Economy

The Money Supply Process

Changes in the Monetary Base

Organization of Central Banks

Monetary Policy Tools

The Conduct of Monetary Policy

The International Financial System and Monetary Policy

The Demand for Money

Linking the Financial System and the Economy: the Is-Lm-Fe Model

Aggregate Demand and Aggregate Supply

Money and Output in the Short Run

Information Problems and Channels for Monetary Policy

Inflation: Causes and Consequences

Filters