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

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Question 131

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A represents an agreement by a bank to pay a foreign company a given amount if certain conditions are met.

A) certificate of deposit
B) banker's acceptance
C) callable option
D) letter of credit

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

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Question 132

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One of the most important aspects of the banking legislation passed during the 1930s established:

A) The Federal Reserve System.
B) The gold standard for currency.
C) The Comptroller of the currency.
D) Federal deposit insurance.

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

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Question 133

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

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

The definition of money supply only includes money that is quickly and easily accessed.

When a commercial bank fails, depositors lose all of their money.

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

Coins and bills are portable and durable.

The U.S. production of the Sacagawea dollar coins provides greater durability than paper dollar bills.

During the early 1980s, the federal government responded to the severe problems plaguing savings and loan associations by:

Which of the following statements most accurately represents the history of U.S. banking?

Pleased with the service provided by a national brokerage house when he bought and sold stocks and bonds, Ted would like to have this brokerage firm handle more of his financial needs. If Ted explores the services offered by such firms in more depth, he will find that:

Traditionally, life insurance companies, pension funds, and brokerage firms are known as .

According to the "Spotlight on Small Business" box in Chapter 20, angel investors usually invest in high-growth companies in fields like technology and biotech rather than local companies like restaurants and roofers.

Tim travels extensively on business. Most of the hotels where he stays provide him with a card that unlocks his room. The card is keyed to the particular lock that matches the lock on the assigned room, and also contains information about Tim. The type of card that Tim is using is a smart card.

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?

Which of the following institutions primarily finances economic development projects in less-developed countries?

Barry has $22,000 in a savings account with the Scott Credit Union. While economic conditions have caused all financial institutions to struggle, Barry feels that his money is safe due to the fact that the credit union's accounts are protected by the:

More than ever, the American economy operates as a distinctly separate entity from the international economy.

Both checks and debit cards will immediately transfers funds from the customer's account to the seller's account.