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

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Question 71

True/False

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Historically, coins and paper money complicated the exchange process.

A) True
B) False

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Question 72

Multiple Choice

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________ involve(s) the Fed buying and selling U.S. government securities to increase or decrease the money supply.

A) Discounting
B) Reserve requirements
C) Deficit funding
D) Open-market operations

E) A) and B)
F) B) and D)

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Question 73

True/False

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The president of the United States appoints the members of the Federal Reserve's board of governors.

________ replace the typical magnetic strip on a credit or debit card with a microprocessor.

Wyatt keeps $25,000 in an interest-bearing time deposit with the Bigbux Bank. While earning a relatively attractive rate of interest, Wyatt had to agree to not withdraw any of the funds until the end of a three-year period. Wyatt's investment represents a(n)

Under Patty's leadership the Bank of Bramblewood would like to increase its loans to customers, but its resources are currently limited by a high reserve rate. As a Federal Reserve member bank, it will borrow additional funds from the Fed and charge its customers an interest rate that is higher than the

The ________ rate represents the interest rate charged by the Fed when loaning funds to member banks.

Coins and bills are portable and durable.

The National Credit Union Administration provides coverage up to $250,000 per individual depositor at each credit union.

The U.S. government has done its best to create dollar bills that are easily duplicated.

In the early 1800s, the United States allowed banks to issue different kinds of currencies.

A savings account represents a demand deposit.

During the Civil War, gold and silver coins were hoarded not because of their currency value, but because they were worth more than currency.

The federal funds rate is the interest rate that banks charge each other.

Which of the following is a bank service provided to help companies conduct business in other countries?

The IMF's goal is to maintain a global monetary system.

A savings and loan association (S&L) is a financial institution that accepts both savings and checking deposits and provides home mortgage loans.

Eric is looking for a place to deposit a $30,000 inheritance from his Great Aunt Clementine, who passed away three months ago. He is not planning to spend his money fast and frivolously. He will need part of the funds from time to time for his college education, which he promised his aunt. After speaking with several sales consultants in banking and nonbank institutions, he likes the fact that he can open a stock brokerage account and a money-market account at Securitas Investment Company (a nonbank company), and will be issued checks for paying bills. You remind him that with the recent mergers between banking and nonbank institutions, he may be able to find a company that provides both the convenience of banking services and low-risk/high-risk securities products.

The FDIC traditionally protects depositors up to $250,000 per account.

Economic events in other nations seldom impact the powerful U.S. economy.