Question 1

Why are savings accounts not considered a component of M-1, whereas checking accounts are?

Accepted Answer

M-1 comprises all currency in circulatio

Question 2

What happens to demand and price during times of inflation?

Accepted Answer

Demand for goods and services increases

Question 3

Which of the following federal laws made transactions between banks significantly more efficient?

Accepted Answer

A)  The Check Clearing for the 21st Century Act 
B)  The Bank Secrecy Act 
C)  The USA Patriot Act 
D)  The Federal Reserve Act 
E)  The Economic Emergency Recovery Act 
A)  The Check Clearing for the 21st Century Act 
B)  The Bank Secrecy Act 
C)  The USA Patriot Act 
D)  The Federal Reserve Act 
E)  The Economic Emergency Recovery Act

Question 4

Why does the government take an active role in the regulation of the U.S. financial system?

Accepted Answer

A)  Commercial banks are essential in paying for international trade. 
B)  To generate fees in addition to those paid to the FDIC. 
C)  To help commercial banks dispose of assets. 
D)  Commercial banks are essential to the creation of money and to the protection of American citizens. 
E)  To allow commercial banks to settle debt. 
A)  Commercial banks are essential in paying for international trade. 
B)  To generate fees in addition to those paid to the FDIC. 
C)  To help commercial banks dispose of assets. 
D)  Commercial banks are essential to the creation of money and to the protection of American citizens. 
E)  To allow commercial banks to settle debt.

Question 5

Which type of pension trust service includes tax-deferred funds that wage earners and their spouses can use to supplement their retirement funds?

Accepted Answer

A)  Trust services 
B)  Securities investment deals 
C)  Pension funds 
D)  Individual retirement accounts (IRAs) 
E)  Savings 
A)  Trust services 
B)  Securities investment deals 
C)  Pension funds 
D)  Individual retirement accounts (IRAs) 
E)  Savings

Question 6

Which of the following financial institutions was taken over by the Federal Housing Finance Agency when it was on the verge of financial failure?

Accepted Answer

A)  Lehman Brothers Holdings 
B)  JP Morgan Chase 
C)  Freddie Mac 
D)  Federal Home Loan Banks System 
E)  Federal Reserve 
A)  Lehman Brothers Holdings 
B)  JP Morgan Chase 
C)  Freddie Mac 
D)  Federal Home Loan Banks System 
E)  Federal Reserve

Question 7

Explain how current financial institutions can create $342 out of a deposit of $200.

Accepted Answer

After the $200 is deposited into a bank,

Question 8

Banks offer a variety of services for customers, including banker's acceptances. Which type of service offered by a bank would include a banker's acceptance option?

Accepted Answer

A)  Pension services 
B)  International services 
C)  Financial advice 
D)  Electronic funds transfer 
E)  Automated teller machines 
A)  Pension services 
B)  International services 
C)  Financial advice 
D)  Electronic funds transfer 
E)  Automated teller machines

Question 9

Which of the following BEST describes the stability characteristic of money?

Accepted Answer

A)  Units of money do not expire after a certain time limit. 
B)  Units of money of different nations are easily converted to other units of money. 
C)  Units of money can be matched with the value of goods. 
D)  Units of money allow people to measure the relative value of goods and services. 
E)  Units of money have relatively constant value. 
A)  Units of money do not expire after a certain time limit. 
B)  Units of money of different nations are easily converted to other units of money. 
C)  Units of money can be matched with the value of goods. 
D)  Units of money allow people to measure the relative value of goods and services. 
E)  Units of money have relatively constant value.

Question 10

The sum actions of employees in an organization is known as what?

Accepted Answer

A)  Ethics 
B)  Regulation 
C)  Culture 
D)  Vision 
E)  Focus 
A)  Ethics 
B)  Regulation 
C)  Culture 
D)  Vision 
E)  Focus

Question 11

Why do exchange rates change daily?

Accepted Answer

A)  Because exchange rates reflect global supply and demand 
B)  Because exchange rates reflect political decisions 
C)  Because exchange rates reflect the economic health of the country 
D)  Because exchange rates are closely tied to the unemployment rates 
E)  Because exchange rates are based on the travel industry 
A)  Because exchange rates reflect global supply and demand 
B)  Because exchange rates reflect political decisions 
C)  Because exchange rates reflect the economic health of the country 
D)  Because exchange rates are closely tied to the unemployment rates 
E)  Because exchange rates are based on the travel industry

Question 12

In the global economy, how is the value of one currency determined when compared to another?

Accepted Answer

A)  World Bank rate 
B)  International monetary fund 
C)  Inflation rate 
D)  Exchange rate 
E)  Automated Clearing House network 
A)  World Bank rate 
B)  International monetary fund 
C)  Inflation rate 
D)  Exchange rate 
E)  Automated Clearing House network

Question 13

What is the difference between a public pension fund and a private pension fund?

Accepted Answer

A public pension fund includes Social Se

Question 14

Which of the following statements BEST describes why an increase in the discount rate often results in a decrease in the money supply?

Accepted Answer

A)  An increase in the discount rate will lower the overall values of loans from the Federal Reserve Banks to individual banks. 
B)  An increase in the discount rate will lower the overall values of loans from individual banks to other financial institutions. 
C)  An increase in the discount rate will lower the overall number of banks issuing loans to individuals. 
D)  An increase in the discount rate will lower the overall number of loans from the Federal Reserve Banks to individual banks. 
E)  An increase in the discount rate will lower the overall number of loans from the Federal Reserve Banks to individuals. 
A)  An increase in the discount rate will lower the overall values of loans from the Federal Reserve Banks to individual banks. 
B)  An increase in the discount rate will lower the overall values of loans from individual banks to other financial institutions. 
C)  An increase in the discount rate will lower the overall number of banks issuing loans to individuals. 
D)  An increase in the discount rate will lower the overall number of loans from the Federal Reserve Banks to individual banks. 
E)  An increase in the discount rate will lower the overall number of loans from the Federal Reserve Banks to individuals.

Question 15

Which of the following is NOT part of the M-1 supply?

Accepted Answer

A)  Currency at hand 
B)  Currency amount of written checks 
C)  Currency available through a debit card 
D)  Currency in checking accounts 
E)  Currency value of time deposits 
A)  Currency at hand 
B)  Currency amount of written checks 
C)  Currency available through a debit card 
D)  Currency in checking accounts 
E)  Currency value of time deposits

Question 16

The increased activity of the financial market in the past five years has resulted in a severe drop in the required premiums for commercial banks to be members of the Federal Deposit Insurance Corporation.

Accepted Answer

A) True 
 B)False

Question 17

Banks create money through contracts with the government to mint bills and coins.

Accepted Answer

A) True 
 B)False

Question 18

Under which of the following circumstances would the Federal Reserve System want to decrease the money supply by increasing the reserve requirement?

Accepted Answer

A)  The economy is experiencing severe inflation, and market activity is very low, yet the financial institutions have a great deal of M-1 resources at their disposal that they are not investing. 
B)  The economy is experiencing severe inflation, yet market activity has been extremely high and erratic. 
C)  The economy is experiencing severe deflation, and market activity is very low, yet the financial institutions have a great deal of M-1 resources at their disposal that they are not investing. 
D)  The economy is experiencing severe deflation, yet market activity has been extremely high and erratic. 
E)  The economy is experiencing severe deflation, market activity is very low, and most financial institutions are low on M-1 resources. 
A)  The economy is experiencing severe inflation, and market activity is very low, yet the financial institutions have a great deal of M-1 resources at their disposal that they are not investing. 
B)  The economy is experiencing severe inflation, yet market activity has been extremely high and erratic. 
C)  The economy is experiencing severe deflation, and market activity is very low, yet the financial institutions have a great deal of M-1 resources at their disposal that they are not investing. 
D)  The economy is experiencing severe deflation, yet market activity has been extremely high and erratic. 
E)  The economy is experiencing severe deflation, market activity is very low, and most financial institutions are low on M-1 resources.

Question 19

Open-market operations are often a more effective method for the Federal Reserve System to expand the money supply than is minting more dollars and coins.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following BEST describes what is called the "open-market operations" of the Federal Reserve System?

Accepted Answer

A)  The development of new financial opportunities for banks 
B)  The minting of new money to disperse into the money market 
C)  The control of interest rates among banks 
D)  The maintenance of a well-functioning lending system among banks 
E)  The buying and selling of securities 
A)  The development of new financial opportunities for banks 
B)  The minting of new money to disperse into the money market 
C)  The control of interest rates among banks 
D)  The maintenance of a well-functioning lending system among banks 
E)  The buying and selling of securities

Why are savings accounts not considered a component of M-1, whereas checking accounts are?

What happens to demand and price during times of inflation?

Which of the following federal laws made transactions between banks significantly more efficient?

Why does the government take an active role in the regulation of the U.S. financial system?

Which type of pension trust service includes tax-deferred funds that wage earners and their spouses can use to supplement their retirement funds?

Which of the following financial institutions was taken over by the Federal Housing Finance Agency when it was on the verge of financial failure?

Explain how current financial institutions can create $342 out of a deposit of $200.

Banks offer a variety of services for customers, including banker's acceptances. Which type of service offered by a bank would include a banker's acceptance option?

Which of the following BEST describes the stability characteristic of money?

The sum actions of employees in an organization is known as what?

Why do exchange rates change daily?

In the global economy, how is the value of one currency determined when compared to another?

What is the difference between a public pension fund and a private pension fund?

Which of the following statements BEST describes why an increase in the discount rate often results in a decrease in the money supply?

Which of the following is NOT part of the M-1 supply?

The increased activity of the financial market in the past five years has resulted in a severe drop in the required premiums for commercial banks to be members of the Federal Deposit Insurance Corporation.

Banks create money through contracts with the government to mint bills and coins.

Under which of the following circumstances would the Federal Reserve System want to decrease the money supply by increasing the reserve requirement?

Open-market operations are often a more effective method for the Federal Reserve System to expand the money supply than is minting more dollars and coins.

Which of the following BEST describes what is called the "open-market operations" of the Federal Reserve System?

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

Filters

Exam 16: Understanding Money and the Role of Banking

Why are savings accounts not considered a component of M-1, whereas checking accounts are?

What happens to demand and price during times of inflation?

Which of the following federal laws made transactions between banks significantly more efficient?

Why does the government take an active role in the regulation of the U.S. financial system?

Which type of pension trust service includes tax-deferred funds that wage earners and their spouses can use to supplement their retirement funds?

Which of the following financial institutions was taken over by the Federal Housing Finance Agency when it was on the verge of financial failure?

Explain how current financial institutions can create $342 out of a deposit of $200.

Banks offer a variety of services for customers, including banker's acceptances. Which type of service offered by a bank would include a banker's acceptance option?

Which of the following BEST describes the stability characteristic of money?

The sum actions of employees in an organization is known as what?

Why do exchange rates change daily?

In the global economy, how is the value of one currency determined when compared to another?

What is the difference between a public pension fund and a private pension fund?

Which of the following statements BEST describes why an increase in the discount rate often results in a decrease in the money supply?

Which of the following is NOT part of the M-1 supply?

The increased activity of the financial market in the past five years has resulted in a severe drop in the required premiums for commercial banks to be members of the Federal Deposit Insurance Corporation.

Banks create money through contracts with the government to mint bills and coins.

Under which of the following circumstances would the Federal Reserve System want to decrease the money supply by increasing the reserve requirement?

Open-market operations are often a more effective method for the Federal Reserve System to expand the money supply than is minting more dollars and coins.

Which of the following BEST describes what is called the "open-market operations" of the Federal Reserve System?

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

Filters