Exam 16: The Financial System

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The chairman of the Federal Reserve Board can accelerate economic activity by lowering interest rates. What primary method does the Federal Reserve use to accomplish this?

(Multiple Choice)
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Securities are also called _____.

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When the Fed sells government securities, banks have ________ money to lend and economic growth ________.

(Multiple Choice)
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In the secondary market, firms and governments issue securities and sell them initially to the public.

(True/False)
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Which of the following interest rates does the Federal Reserve actually set?

(Multiple Choice)
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MATCHING Complete the following using the terms listed. -____ are cooperative financial institutions that are owned by their depositors, all of whom are members.

(Multiple Choice)
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Bonds vary considerably in terms of risk. One tool used by bond investors to assess the risk of a bond is its so-called risk rating.

(True/False)
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Savings banks have greatly expanded their business lending activities in recent years while cutting back on their home mortgage lending activity.

(True/False)
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What is the Federal Reserve's most important function? How does this function affect the nation's rate of inflation and employment?

(Essay)
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Which of the following agencies regulates both state and federally chartered commercial banks?

(Multiple Choice)
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Which of the following statements is incorrect?

(Multiple Choice)
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_____ are creditors of a corporation or government body.

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M2 includes ________ M1.

(Multiple Choice)
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Which of the following financial institutions is organized as a not-for-profit cooperative?

(Multiple Choice)
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The ___ establishes and updates rules to ensure that member brokers perform their basic functions honestly and fairly.

(Multiple Choice)
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In order to join a credit union, you have to share something in common with other credit union members.

(True/False)
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Sean made a purchase at his local Walmart. Instead of writing a check, Sean used a card issued by his bank with a Visa logo on the front. He entered his PIN and the purchase was automatically deducted from his checking account. Sean used his ________ card.

(Multiple Choice)
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Which of the following financial institutions would typically invest the largest portions of its funds in home mortgage loans?

(Multiple Choice)
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The New York Stock Exchange (NYSE) is a secondary market.

(True/False)
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Raising the reserve requirement tends to increase the supply of money, thereby lowering interest rates.

(True/False)
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