Question 1

Capital is a term used to refer to a borrower's financial ability to meet credit obligations and make regular payments.

Accepted Answer

A) True 
 B)False

Question 2

How do savings and loan associations (S&Ls) and credit unions differ from commercial banks?

Accepted Answer

Savings and Loan Associations (S&Ls) and

Question 3

York Department Store does 50 percent of its business on credit and frequently has to tolerate slow-paying customers and those who simply do not pay. Now it would like to facilitate immediate cash purchases for customers who don't like to write checks or to carry much cash with them. What would you recommend?

Accepted Answer

A)  Buy an automated teller machine for the store. 
B)  Use an automated clearinghouse. 
C)  Buy a point-of-sale terminal for the store. 
D)  Use an electronic bank teller. 
E)  Tell the customers that when they are billed they must send a check or use the bill-payment-by-telephone procedure. 
A)  Buy an automated teller machine for the store. 
B)  Use an automated clearinghouse. 
C)  Buy a point-of-sale terminal for the store. 
D)  Use an electronic bank teller. 
E)  Tell the customers that when they are billed they must send a check or use the bill-payment-by-telephone procedure.

Question 4

For information concerning businesses, the most widely used credit-reporting agency in the world is the TransUnion Credit Information Company.

Accepted Answer

A) True 
 B)False

Question 5

Nancy Murray has $6,000 in demand deposits with the Teachers Credit Union. This means that she has $6,000 in

Accepted Answer

A)  savings accounts. 
B)  checking accounts. 
C)  certificates of deposit. 
D)  IRA accounts. 
E)  Keogh accounts. 
A)  savings accounts. 
B)  checking accounts. 
C)  certificates of deposit. 
D)  IRA accounts. 
E)  Keogh accounts.

Question 6

In her college economics class, Kelly will give a report on money. The title of her paper is "Money: It Doesn't Disintegrate When Handled or Melt in the Sun." Which of the five essential elements of money will she talk most about?

Accepted Answer

A)  Divisibility 
B)  Portability 
C)  Stability 
D)  Durability 
E)  Difficulty to counterfeit 
A)  Divisibility 
B)  Portability 
C)  Stability 
D)  Durability 
E)  Difficulty to counterfeit

Question 7

Community Bank
Jeffrey is the training manager for the Community Bank in Maryland. Jeffrey has developed a training program for all new employees that emphasizes understanding the basics of money. Jeffrey and the bank's management believe that if the employees understand the basics of money, they can utilize the information in their own personal finances as well as guide and answer questions from bank customers.
The bank recently hired Laila. She was hired at a high-level position because she brought with her extensive bank management experience. Laila's responsibilities included making sure that the reserve requirement would always be met and keeping track of the interest rate that the Federal Reserve System charged for loans to member banks.
-Refer to Community Bank. One of Laila's responsibilities is keeping track of the interest rate that the Federal Reserve System charges for loans to member banks. Which of the following should Laila be tracking?

Accepted Answer

A)  Federal rate 
B)  FRS rate 
C)  Reserve rate 
D)  Discount rate 
E)  System rate 
A)  Federal rate 
B)  FRS rate 
C)  Reserve rate 
D)  Discount rate 
E)  System rate

Question 8

When the Federal Reserve System sets a new margin requirement, it is regulating the

Accepted Answer

A)  commercial bank industry. 
B)  credit unions. 
C)  buying of securities. 
D)  savings and loan associations. 
E)  national banks. 
A)  commercial bank industry. 
B)  credit unions. 
C)  buying of securities. 
D)  savings and loan associations. 
E)  national banks.

Question 9

Which of the following is most commonly used to obtain cash from an ATM?

Accepted Answer

A)  Credit cards 
B)  Checks 
C)  Short-term loans 
D)  Debit cards 
E)  Electronic transfers 
A)  Credit cards 
B)  Checks 
C)  Short-term loans 
D)  Debit cards 
E)  Electronic transfers

Question 10

When the Fed increases the reserve requirement, banks have more money available for lending.

Accepted Answer

A) True 
 B)False

Question 11

A nation's currency should be easy to imitate and copy in order to make it more divisible.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following methods does the Federal Reserve System not use to control the money supply and the economy?

Accepted Answer

A)  Buys government securities and bonds 
B)  Increases the reserve requirement 
C)  Increases the discount rate 
D)  Lends money to private businesses 
E)  Sells government securities and bonds 
A)  Buys government securities and bonds 
B)  Increases the reserve requirement 
C)  Increases the discount rate 
D)  Lends money to private businesses 
E)  Sells government securities and bonds

Question 13

The discount rate is the interest rate the Federal Reserve charges for loans to member banks.

Accepted Answer

A) True 
 B)False

Question 14

In 2011 the seven largest banks in the United States were

Accepted Answer

A)  mutual banks. 
B)  national banks. 
C)  state banks. 
D)  credit unions. 
E)  savings banks. 
A)  mutual banks. 
B)  national banks. 
C)  state banks. 
D)  credit unions. 
E)  savings banks.

Question 15

Which of the following statements is false?

Accepted Answer

A)  The federal funds rate is the interest rate at which a bank lends funds to another bank. 
B)  The federal funds rate is determined by the open market. 
C)  The federal funds rate is established on a semiannual basis by the board of governors of the Federal Reserve. 
D)  The discount rate is different from the federal funds rate. 
E)  The discount rate is the interest rate paid by a member bank to borrow funds from the Fed. 
A)  The federal funds rate is the interest rate at which a bank lends funds to another bank. 
B)  The federal funds rate is determined by the open market. 
C)  The federal funds rate is established on a semiannual basis by the board of governors of the Federal Reserve. 
D)  The discount rate is different from the federal funds rate. 
E)  The discount rate is the interest rate paid by a member bank to borrow funds from the Fed.

Question 16

How is money used to eliminate the problems associated with the barter system?

Accepted Answer

Money serves as a solution to the proble

Question 17

Time deposits include

Accepted Answer

A)  near-monies. 
B)  demand deposits. 
C)  NOW accounts. 
D)  checking accounts. 
E)  negotiable order of withdrawal accounts. 
A)  near-monies. 
B)  demand deposits. 
C)  NOW accounts. 
D)  checking accounts. 
E)  negotiable order of withdrawal accounts.

Question 18

Walter Manufacturing Company needs to obtain appropriate financing for plant expansion. You would recommend a

Accepted Answer

A)  short-term loan. 
B)  line of credit. 
C)  revolving credit agreement. 
D)  long-term business loan. 
E)  one-year loan. 
A)  short-term loan. 
B)  line of credit. 
C)  revolving credit agreement. 
D)  long-term business loan. 
E)  one-year loan.

Question 19

During the economic crisis, what specific steps did the Federal Reserve Board take to attempt to minimize the effects of the crisis for businesses and individuals? Were the steps viewed as having stabilized the economy?

Accepted Answer

During the economic crisis, the Federal

Question 20

The average repayment term for long-term business loans is generally

Accepted Answer

A)  less than one year. 
B)  between two and three years. 
C)  between three and four years. 
D)  between three and seven years. 
E)  between five and ten years. 
A)  less than one year. 
B)  between two and three years. 
C)  between three and four years. 
D)  between three and seven years. 
E)  between five and ten years.

Exam 18: Understanding Money, Banking, and Credit

Capital is a term used to refer to a borrower's financial ability to meet credit obligations and make regular payments.

How do savings and loan associations (S&Ls) and credit unions differ from commercial banks?

For information concerning businesses, the most widely used credit-reporting agency in the world is the TransUnion Credit Information Company.

Nancy Murray has $6,000 in demand deposits with the Teachers Credit Union. This means that she has $6,000 in

In her college economics class, Kelly will give a report on money. The title of her paper is "Money: It Doesn't Disintegrate When Handled or Melt in the Sun." Which of the five essential elements of money will she talk most about?

When the Federal Reserve System sets a new margin requirement, it is regulating the

Which of the following is most commonly used to obtain cash from an ATM?

When the Fed increases the reserve requirement, banks have more money available for lending.

A nation's currency should be easy to imitate and copy in order to make it more divisible.

Which of the following methods does the Federal Reserve System not use to control the money supply and the economy?

The discount rate is the interest rate the Federal Reserve charges for loans to member banks.

In 2011 the seven largest banks in the United States were

Which of the following statements is false?

How is money used to eliminate the problems associated with the barter system?

Time deposits include

Walter Manufacturing Company needs to obtain appropriate financing for plant expansion. You would recommend a

During the economic crisis, what specific steps did the Federal Reserve Board take to attempt to minimize the effects of the crisis for businesses and individuals? Were the steps viewed as having stabilized the economy?

The average repayment term for long-term business loans is generally

Exploring the World of Business and Economics

A: Being Ethical and Socially Responsible

B: Being Ethical and Socially Responsible

A: Exploring Global Business

B: Exploring Global Business

Choosing a Form of Business Ownership

Small Business, Entrepreneurship, and Franchises

Understanding the Management Process

Creating a Flexible Organization

Producing Quality Goods and Services

Attracting and Retaining the Best Employees

Motivating and Satisfying Employees and Teams

Enhancing Union-Management Relations

Building Customer Relationships Through Effective Marketing

A: Creating and Pricing Products That Satisfy Customers

B: Creating and Pricing Products That Satisfy Customers

Wholesaling, Retailing, and Physical Distribution

Developing Integrated Marketing Communications

Social Media, E-Business, and Accounting

Using Management and Accounting Information

Mastering Financial Management

A: Understanding Personal Finances and Investments

B: Understanding Personal Finances and Investments

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