Question 1

Which of the following historical events motivated Congress to establish the Federal Reserve System?

Accepted Answer

A)  The significant outflow of gold during the Civil War
B)  The collapse of the Second National Bank of the United States
C)  The banking panic and cash shortage of 1907
D)  The Great DepressionE) All of the above
F) B) and C)

Question 2

The ___________ represents one of the Fed's most powerful monetary policy tools.

Accepted Answer

A)  reserve requirement
B)  discount rate
C)  margin requirement
D)  working capital requirementE) B) and C)
F) A) and C)

Question 3

The Federal Reserve requires that ATM machines be located within 100 yards of a commercial bank.

Accepted Answer

A) True 
 B)False

Question 4

The World Bank's mission is to lend money to developing nations to help boost their economic development in various industries.Since its inception,the World Bank has taken significant criticism of its programs.Farmers in a cooperative in the developing nation of Urozil have benefited by World Bank loans.Most recently their processing facilities that employ several laborers are taking criticism from human rights organizations.After studying this chapter,which of the following is a common criticism of these groups?

Accepted Answer

A)  The loans are too small,for all practical purposes.Farmers are spending their funds on sustainability measures rather than producing the most they can from each crop.
B)  Working conditions in the processing plant are unacceptable,similar to sweatshop conditions.
C)  Urozil is most likely not paying back its loans,and still asking for the World Bank to raise its debt ceiling.
D)  Farmers who own the cooperative are not vaccinating their workers against AIDS,even though the World Bank partners with pharmaceutical firms who provide free AIDS medications.E) A) and D)
F) B) and D)

Question 5

Which of the following represents a benefit of coins over paper money?

Accepted Answer

A)  Improved portability
B)  Increased divisibility
C)  Enhanced stability
D)  Improved durabilityE) B) and D)
F) A) and B)

Question 6

The Federal Reserve fulfills its role as a "lender of last resort" when it loans funds to:

Accepted Answer

A)  small businesses that are unable to obtain loans from other sources.
B)  banks during banking emergencies.
C)  major corporations that are on the verge of bankruptcy.
D)  the federal government when deficits exceed borrowing limits set by Congress.E) A) and B)
F) None of the above

Question 7

Traditionally,banks provide loans to individuals and companies according to the recipient's ______________.

Accepted Answer

A)  future earnings potential
B)  family history
C)  volume of credit already established
D)  creditworthinessE) A) and C)
F) A) and B)

Question 8

An) __________ allows money to be exchanged electronically more quickly and more economically than with paper checks.

Accepted Answer

A)  electronic check conversion EC
C)  
B)  electronic funds transfer system
C)  virtual banking operation
D)  telechecking systemE) None of the above
F) A) and C)

Question 9

Companies are now developing ways to send money across national boundaries using e-cash.

Accepted Answer

A) True 
 B)False

Question 10

Banks help businesses operate in other countries by exchanging the currency of one nation for the currency of another.

Accepted Answer

A) True 
 B)False

Question 11

A savings account represents a demand deposit.

Accepted Answer

A) True 
 B)False

Question 12

Everything else held constant,an international bank based in New York would prefer to loan money to an efficient firm operating in San Paulo,Brazil than an inefficient firm operating in southern Californi
A.

Accepted Answer

A) True 
 B)False

Question 13

A central bank allows individual banks to deposit and to borrow funds.

Accepted Answer

A) True 
 B)False

Question 14

The M-1 definition of the money supply includes travelers' checks.

Accepted Answer

A) True 
 B)False

Question 15

Discuss the methods the Fed uses to enact monetary policy and provide an explanation of the effects these methods have on the supply of money.

Accepted Answer

The Federal Reserve System has three bas...

Question 16

Coins and bills are portable and durable.

Accepted Answer

A) True 
 B)False

Question 17

Alfredo banks at a commercial bank that advertises its membership in the FDIC.This means that:

Accepted Answer

A)  the bank guarantees it will pay the highest possible interest rate on his savings.
B)  his money is insured by an independent agency of the federal government.
C)  his money is automatically invested in securities issued by the federal government.
D)  the bank is a member of a larger consortium of banks that will enable Alfredo to cash checks and obtain basic bank services in virtually any major city in the United States.E) B) and C)
F) None of the above

Question 18

While an electronic funds transfer represents a faster and more flexible method of making payments than writing checks,it is more expensive for banks.

Accepted Answer

A) True 
 B)False

Question 19

The Federal Reserve that was established in 1907 was to be a "lender of last resort," loans money to small businesses that are unable to obtain loans through private banks.

Accepted Answer

A) True 
 B)False

Question 20

The M-3 includes M-1 money,but not M-2 money.

Accepted Answer

A) True 
 B)False

Exam 20: Money,financial Institutions,and the Federal Reserve

Which of the following represents a benefit of coins over paper money?

Correct Answer
verified

The M-1 definition of the money supply includes travelers' checks.

Correct Answer
verified

Everything else held constant,an international bank based in New York would prefer to loan money to an efficient firm operating in San Paulo,Brazil than an inefficient firm operating in southern Californi A.

Correct Answer
verified

The Federal Reserve that was established in 1907 was to be a "lender of last resort," loans money to small businesses that are unable to obtain loans through private banks.

Correct Answer
verified

The Federal Reserve requires that ATM machines be located within 100 yards of a commercial bank.

Correct Answer
verified

Correct Answer
verified

Coins and bills are portable and durable.

Correct Answer
verified

A central bank allows individual banks to deposit and to borrow funds.

Correct Answer
verified

The M-3 includes M-1 money,but not M-2 money.

Correct Answer
verified

Companies are now developing ways to send money across national boundaries using e-cash.

Correct Answer
verified

Discuss the methods the Fed uses to enact monetary policy and provide an explanation of the effects these methods have on the supply of money.

Correct Answer
verified
The Federal Reserve System has three bas...
View Answer

The ___________ represents one of the Fed's most powerful monetary policy tools.

Correct Answer
verified

An) __________ allows money to be exchanged electronically more quickly and more economically than with paper checks.

Correct Answer
verified

Traditionally,banks provide loans to individuals and companies according to the recipient's ______________.

Correct Answer
verified

Banks help businesses operate in other countries by exchanging the currency of one nation for the currency of another.

Correct Answer
verified

Which of the following historical events motivated Congress to establish the Federal Reserve System?

Correct Answer
verified

Alfredo banks at a commercial bank that advertises its membership in the FDIC.This means that:

Correct Answer
verified

The Federal Reserve fulfills its role as a "lender of last resort" when it loans funds to:

Correct Answer
verified

A savings account represents a demand deposit.

Correct Answer
verified

While an electronic funds transfer represents a faster and more flexible method of making payments than writing checks,it is more expensive for banks.

Correct Answer
verified

Exam 20: Money,financial Institutions,and the Federal Reserve

Which of the following represents a benefit of coins over paper money?

Correct AnswerverifiedShow Answer

The M-1 definition of the money supply includes travelers' checks.

Correct AnswerverifiedShow Answer

Everything else held constant,an international bank based in New York would prefer to loan money to an efficient firm operating in San Paulo,Brazil than an inefficient firm operating in southern Californi A.

Correct AnswerverifiedShow Answer

The Federal Reserve that was established in 1907 was to be a "lender of last resort," loans money to small businesses that are unable to obtain loans through private banks.

Correct AnswerverifiedShow Answer

The Federal Reserve requires that ATM machines be located within 100 yards of a commercial bank.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Coins and bills are portable and durable.

Correct AnswerverifiedShow Answer

A central bank allows individual banks to deposit and to borrow funds.

Correct AnswerverifiedShow Answer

The M-3 includes M-1 money,but not M-2 money.

Correct AnswerverifiedShow Answer

Companies are now developing ways to send money across national boundaries using e-cash.

Correct AnswerverifiedShow Answer

Discuss the methods the Fed uses to enact monetary policy and provide an explanation of the effects these methods have on the supply of money.

Correct AnswerverifiedThe Federal Reserve System has three bas...View AnswerShow Answer

The ___________ represents one of the Fed's most powerful monetary policy tools.

Correct AnswerverifiedShow Answer

An) __________ allows money to be exchanged electronically more quickly and more economically than with paper checks.

Correct AnswerverifiedShow Answer

Traditionally,banks provide loans to individuals and companies according to the recipient's ______________.

Correct AnswerverifiedShow Answer

Banks help businesses operate in other countries by exchanging the currency of one nation for the currency of another.

Correct AnswerverifiedShow Answer

Which of the following historical events motivated Congress to establish the Federal Reserve System?

Correct AnswerverifiedShow Answer

Alfredo banks at a commercial bank that advertises its membership in the FDIC.This means that:

Correct AnswerverifiedShow Answer

The Federal Reserve fulfills its role as a "lender of last resort" when it loans funds to:

Correct AnswerverifiedShow Answer

A savings account represents a demand deposit.

Correct AnswerverifiedShow Answer

While an electronic funds transfer represents a faster and more flexible method of making payments than writing checks,it is more expensive for banks.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
The Federal Reserve System has three bas...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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