Question 1

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

Question 2

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 3

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

Question 4

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. 
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 5

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

Question 6

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 
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 7

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 8

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

Question 9

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 
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 10

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

Question 11

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

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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 14

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. 
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 15

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 16

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 17

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 18

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.) 
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 19

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. 
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 20

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. 
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.

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?

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

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

How are the individual Federal Reserve Banks organized?

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

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

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?

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

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

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

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

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.

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

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

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

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

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

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

The U.S. Business Environment

Understanding Business Ethics and Social Responsibility

Entrepreneurship, New Ventures, and Business Ownership

Understanding the Global Context of Business

Managing the Business

Organizing the Business

Operations Management and Quality

Employee Behavior and Motivation

Leadership and Decision Making

Human Resource Management and Labor Relations

Marketing Processes and Consumer Behavior

Developing and Pricing Products

Distributing and Promoting Products

Information Technology (IT)for Business

The Role of Accountants and Accounting Information

Managing Business Finances

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Exam 16: Understanding Money and the Role of Banking

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?

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

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

How are the individual Federal Reserve Banks organized?

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

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

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?

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

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

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

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

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.

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

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

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

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

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

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

The U.S. Business Environment

Understanding Business Ethics and Social Responsibility

Entrepreneurship, New Ventures, and Business Ownership

Understanding the Global Context of Business

Managing the Business

Organizing the Business

Operations Management and Quality

Employee Behavior and Motivation

Leadership and Decision Making

Human Resource Management and Labor Relations

Marketing Processes and Consumer Behavior

Developing and Pricing Products

Distributing and Promoting Products

Information Technology (IT)for Business

The Role of Accountants and Accounting Information

Managing Business Finances

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