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

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Question 151

True/False

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The Federal Reserve System was designed to prevent a repeat of the 1907 banking crisis.

A) True
B) False

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Question 152

Multiple Choice

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A(n) __________ allows money to be exchanged electronically more quickly and more economically than with paper checks

A) electronic check conversion (ECC)
B) electronic funds transfer system
C) virtual banking operation
D) telechecking system

E) All of the above
F) B) and C)

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Question 153

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Which of the following institutions monitors the monetary policies of member nations to ensure a global monetary system that works best for all nations?

Although there are many features about online banking that customers do not care for, they are seldom concerned with security due to continued assurances by the banking industry.

Commercial banks, savings and loan associations, and credit unions all represent components of the American banking system.

Credit unions are for-profit cooperatives.

If you are trying to sell your state-of-the-art bicycles into the Japanese market, you are likely to sell more bicycles if the dollar has strength against the Japanese yen.

Pension funds invest monies contributed by employers and/or employees for the benefit of their members' retirement.

Certificates of deposit (CDs) represent demand deposits issued by banks.

M-2 represents the most commonly used definition of the money supply.

A demand deposit is the technical name for a checking account.

Damian has played supporting roles in a number of movies and is passionate about his craft to the point where he created a home theatre inside his house. He has satellite where he receives an unlimited number of movies, and he also has an online account with Netflix. For added convenience, he has set up direct payment to these companies. This means when his statement arrives each month, he will get online and tell his bank how much to pay these vendors.

Theoretically, with the proper monetary policy, the U.S. economy can continue to grow without causing inflation.

Mini-Case The Bank of Bramblewood survived the Great Depression through the dedication, hard work, and conservative practices of its first president, Red E. Kash. Indeed, Red's personal drive and business skills helped the Bank of Bramblewood thrive during his 50-year tenure as president. After his retirement his granddaughter, Patty, took a position with the bank. Patty inherited her grandfather's business skills and by 1994 she had risen to become the second member of the Kash family to head the bank. Patty admits she owes a great deal to her grandfather's leadership and advice, but she also quickly points out that the banking industry has changed significantly since Red retired. Patty graduated from college with a degree in finance, and also holds several certifications with the American Institute of Banking. "What Granddad achieved during his era was truly remarkable," Patty points out. "But times have changed, and banking regulations and bank competitors have certainly changed. If we hope to prosper in this century we have to adjust to new competition, learn to work with new technologies, and take advantage of new opportunities. The Bank of Bramblewood has always operated for the benefit of our customers and we will continue to do so. But we must serve them more efficiently and creatively than in the past." -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 ________________.

A time deposit that earns interest is a _______________

When the value of the dollar increases relative to the euro, the number of U.S. dollars needed to purchase a bottle of French wine decreases.

Commercial banks operate as nonprofit institutions.

Mini-Case The Bank of Bramblewood survived the Great Depression through the dedication, hard work, and conservative practices of its first president, Red E. Kash. Indeed, Red's personal drive and business skills helped the Bank of Bramblewood thrive during his 50-year tenure as president. After his retirement his granddaughter, Patty, took a position with the bank. Patty inherited her grandfather's business skills and by 1994 she had risen to become the second member of the Kash family to head the bank. Patty admits she owes a great deal to her grandfather's leadership and advice, but she also quickly points out that the banking industry has changed significantly since Red retired. Patty graduated from college with a degree in finance, and also holds several certifications with the American Institute of Banking. "What Granddad achieved during his era was truly remarkable," Patty points out. "But times have changed, and banking regulations and bank competitors have certainly changed. If we hope to prosper in this century we have to adjust to new competition, learn to work with new technologies, and take advantage of new opportunities. The Bank of Bramblewood has always operated for the benefit of our customers and we will continue to do so. But we must serve them more efficiently and creatively than in the past." -As the bank has grown and expanded to other towns in its region, several of its business customers are participating in global trade. Which of the following services provided by the bank would help companies conduct international business?

Chad travels extensively for his company. He stays at hotels that provide him with a(n) ____________ that is imbedded with his personal information as well as a code to unlock his hotel room

Savings and loan associations, also known as thrift institutions, were created to promote consumer thrift and home ownership.