Question 1

Which of the following is not a favorable characteristic of money?

Accepted Answer

A)   Barterability
B)   Divisibility
C)   Portability
D)   DurabilityE) B) and C)
F) C) and D)

Question 2

Some financial services organizations lend money directly to corporations.

Accepted Answer

A) True 
 B)False

Question 3

One thing is for certain, the average borrower's risk-averse behavior did not contribute to the problems that spiraled out of control and caused the recent banking crisis.

Accepted Answer

A) True 
 B)False

Question 4

As a response to a rise in savings and loan failures, the federal government no longer insures holders of accounts in savings and loan associations.

Accepted Answer

A) True 
 B)False

Question 5

A savings account represents a demand deposit.

Accepted Answer

A) True 
 B)False

Question 6

Thanks in part to the Federal Reserve System, few banks failed during the Great Depression.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)   discount
B)   prime
C)   federal funds
D)   reserveE) None of the above
F) B) and C)

Question 8

Which of the following can include an embedded radio-frequency antenna that allows the holder to access secure areas in buildings or buy gas with the swipe of a card?

Accepted Answer

A)   smart cards
B)   direct deposit cards
C)   e-cards
D)   check conversion cardsE) B) and C)
F) None of the above

Question 9

The World Bank primarily finances projects to improve the productivity and standard of living in less-developed nations.

Accepted Answer

A) True 
 B)False

Question 10

In the early 2000s, banks took the mortgages that they owned, created mortgage-backed securities out of them, and sold them as safe investments.

Accepted Answer

A) True 
 B)False

Question 11

The Federal Reserve assists in the processing of checks between banks.

Accepted Answer

A) True 
 B)False

Question 12

Barter involves the use of electronic payment systems, like Paypal.com, for online transactions.

Accepted Answer

A) True 
 B)False

Question 13

Brokerage firms now compete with commercial banks by offering high-yield combination savings and checking accounts.

Accepted Answer

A) True 
 B)False

Question 14

The community college where Jake works requires all employees to contribute to a pension fund. At this time, he is not too worried about the safety of this contribution because:

Accepted Answer

A)   the pensions fund's investments are always backed by the full faith and credit of the U.S. government.
B)   pension funds are provided by nonbanks so they are not going to take this money and lend it to others.
C)   he is considered a state employee, and as such, he is protected from this fund going bankrupt.
D)   pension funds usually make conservative investments.E) B) and D)
F) B) and C)

Question 15

Inflation occurs in an economy with too little money chasing too many goods.

Accepted Answer

A) True 
 B)False

Question 16

__________ occurs when goods are traded directly for other goods

Accepted Answer

A)   Barter
B)   Direct exchange
C)   Direct marketing
D)   CreditE) A) and D)
F) All of the above

Question 17

A __________ represents an unconditional agreement by a bank to pay a specified amount at a particular time

Accepted Answer

A)   certified trade acceptance
B)   banker's acceptance
C)   letter of credit
D)   guaranteed funds agreementE) A) and C)
F) C) and D)

Question 18

The Federal Reserve System enabled the U.S. economy to avoid serious banking problems during the Great Depression.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Several European countries report a significant decrease in the level of jobs, income, and production of goods and services. The size and strength of the U.S. economy insulates U.S. businesses from the economic problems of other countries.

Accepted Answer

A) True 
 B)False

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

A savings account represents a demand deposit.

Correct AnswerverifiedShow Answer

Some financial services organizations lend money directly to corporations.

Correct AnswerverifiedShow Answer

Thanks in part to the Federal Reserve System, few banks failed during the Great Depression.

Correct AnswerverifiedShow Answer

Which of the following is not a favorable characteristic of money?

Correct AnswerverifiedShow Answer

Brokerage firms now compete with commercial banks by offering high-yield combination savings and checking accounts.

Correct AnswerverifiedShow Answer

The Federal Reserve System enabled the U.S. economy to avoid serious banking problems during the Great Depression.

Correct AnswerverifiedShow Answer

Several European countries report a significant decrease in the level of jobs, income, and production of goods and services. The size and strength of the U.S. economy insulates U.S. businesses from the economic problems of other countries.

Correct AnswerverifiedShow Answer

One thing is for certain, the average borrower's risk-averse behavior did not contribute to the problems that spiraled out of control and caused the recent banking crisis.

Correct AnswerverifiedShow Answer

Inflation occurs in an economy with too little money chasing too many goods.

Correct AnswerverifiedShow Answer

As a response to a rise in savings and loan failures, the federal government no longer insures holders of accounts in savings and loan associations.

Correct AnswerverifiedShow Answer

A __________ represents an unconditional agreement by a bank to pay a specified amount at a particular time

Correct AnswerverifiedShow Answer

The World Bank primarily finances projects to improve the productivity and standard of living in less-developed nations.

Correct AnswerverifiedShow Answer

__________ occurs when goods are traded directly for other goods

Correct AnswerverifiedShow Answer

Barter involves the use of electronic payment systems, like Paypal.com, for online transactions.

Correct AnswerverifiedShow Answer

Which of the following can include an embedded radio-frequency antenna that allows the holder to access secure areas in buildings or buy gas with the swipe of a card?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the early 2000s, banks took the mortgages that they owned, created mortgage-backed securities out of them, and sold them as safe investments.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Federal Reserve assists in the processing of checks between banks.

Correct AnswerverifiedShow Answer

The community college where Jake works requires all employees to contribute to a pension fund. At this time, he is not too worried about the safety of this contribution because:

Correct AnswerverifiedShow Answer

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