Question 1

________ occurs when goods are traded directly for other goods.

Accepted Answer

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

Question 2

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

Question 3

By the time of the Civil War, the efficient banking system of the United States was the envy of the rest of the world.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Efficient monetary systems eliminate the use of barter.

Accepted Answer

A) True 
 B)False

Question 7

The Fed announces that it intends to implement policies to increase interest rates. Which of the following correctly identifies the most likely result of higher U.S. interest rates?

Accepted Answer

A)   More money will flow into the United States from foreign investors.
B)   The economy will experience an increase in business investment spending.
C)   The value of the dollar will fall relative to other currencies.
D)   The rate of inflation will increase.E) A) and D)
F) A) and C)

Question 8

By reducing the reserve requirement, the Fed intends to increase the money supply.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)   certificate of deposit
B)   banker's acceptance
C)   callable option
D)   letter of creditE) None of the above
F) A) and D)

Question 11

The board of governors of the Federal Reserve System determines

Accepted Answer

A)   exchange rates.
B)   U.S. monetary policy.
C)   inflows and outflows of gold reserves to ensure a stable money supply.
D)   how much money the U.S. will loan to foreign governments.E) C) and D)
F) A) and C)

Question 12

The purpose of creating the FDIC was to

Accepted Answer

A)   restore confidence in banking institutions.
B)   serve as clearinghouses for transactions involving commercial banks and savings and loans.
C)   provide federally guaranteed insurance to small businesses at low cost.
D)   help the Federal Reserve enforce reserve requirements.E) A) and D)
F) B) and C)

Question 13

The strength of the U.S. dollar depends on the strength of the U.S. economy relative to the economies of other nations.

Accepted Answer

A) True 
 B)False

Question 14

When comparing a letter of credit and a banker's acceptance for financing international business transactions, a letter of credit

Accepted Answer

A)   provides payment anywhere in the world. A banker's acceptance pays in areas in which the bank has a branch.
B)   pays a specified amount if certain conditions are met. Conversely, a banker's acceptance represents an unconditional promise to pay.
C)   requires both the buyer and seller to deal in the same currencies. A banker's acceptance provides for currency exchange.
D)   provides financing directly between buyers and sellers in different countries. A banker's acceptance provides an arrangement in which a bank serves as a broker taking title to the goods.E) C) and D)
F) B) and D)

Question 15

Existing regulations prohibit online banking activities unless the bank also operates a traditional brick-and-mortar facility.

Accepted Answer

A) True 
 B)False

Question 16

Tee Time Golf Resort plans to use famous Kauri wood from New Zealand for parts of the interior of the magnificent clubhouse at its new golf resort near Salem, OR. According to the importer, each 10-foot slab will cost Tee Time approximately $5,000. Looking at the exchange rates, Tee Time's finance director noted that $500 US dollars = $738 NZ dollars. The importer will order directly from his source in New Zealand. Tee Time's finance director has determined that

Accepted Answer

A)   it's not a good time to buy the wood.
B)   it's a good time to buy the wood.
C)   there will be a shortage of the wood.
D)   it will cost less when the exchange rate of U.S. dollars to NZ dollars is just about equal.E) A) and D)
F) All of the above

Question 17

Banks prefer that customers use an electronic funds transfer system rather than traditional methods of payment because

Accepted Answer

A)   traditional payments are subject to regulation by the Fed and electronic transactions are not.
B)   electronic funds are subject to a smaller reserve requirement than traditional funds.
C)   electronic funds transfer is more efficient and less expensive for banks than traditional check-based payments.
D)   the bank generates advertising revenue from its website.E) A) and D)
F) None of the above

Question 18

Savings and loan associations are sometimes known as

Accepted Answer

A)   nonbanks.
B)   thrift institutions.
C)   credit unions.
D)   bankers' banks.E) None of the above
F) A) and C)

Question 19

How did banks contribute to the recent financial crisis?

Accepted Answer

A)   They began to offer investment products other than demand and time deposits.
B)   They provided loans higher than the discount rate.
C)   They made risky loans and then created mortgage-backed securities from the assets they held.
D)   They refused to sell anything other than fixed-rate mortgages.E) A) and C)
F) A) and D)

Question 20

Economic growth and the creation of jobs depend on the availability of money.

Accepted Answer

A) True 
 B)False

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

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

Correct Answer
verified

How did banks contribute to the recent financial crisis?

Correct Answer
verified

The purpose of creating the FDIC was to

Correct Answer
verified

When comparing a letter of credit and a banker's acceptance for financing international business transactions, a letter of credit

Correct Answer
verified

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

Correct Answer
verified

Existing regulations prohibit online banking activities unless the bank also operates a traditional brick-and-mortar facility.

Correct Answer
verified

Economic growth and the creation of jobs depend on the availability of money.

Correct Answer
verified

The size and strength of the U.S. economy insulates U.S. businesses from the economic problems of other countries.

Correct Answer
verified

The board of governors of the Federal Reserve System determines

Correct Answer
verified

By reducing the reserve requirement, the Fed intends to increase the money supply.

Correct Answer
verified

Correct Answer
verified

The strength of the U.S. dollar depends on the strength of the U.S. economy relative to the economies of other nations.

Correct Answer
verified

________ occurs when goods are traded directly for other goods.

Correct Answer
verified

Efficient monetary systems eliminate the use of barter.

Correct Answer
verified

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

Correct Answer
verified

Savings and loan associations are sometimes known as

Correct Answer
verified

The Fed announces that it intends to implement policies to increase interest rates. Which of the following correctly identifies the most likely result of higher U.S. interest rates?

Correct Answer
verified

By the time of the Civil War, the efficient banking system of the United States was the envy of the rest of the world.

Correct Answer
verified

Banks prefer that customers use an electronic funds transfer system rather than traditional methods of payment because

Correct Answer
verified

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

Correct Answer
verified

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

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

Correct AnswerverifiedShow Answer

How did banks contribute to the recent financial crisis?

Correct AnswerverifiedShow Answer

The purpose of creating the FDIC was to

Correct AnswerverifiedShow Answer

When comparing a letter of credit and a banker's acceptance for financing international business transactions, a letter of credit

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Existing regulations prohibit online banking activities unless the bank also operates a traditional brick-and-mortar facility.

Correct AnswerverifiedShow Answer

Economic growth and the creation of jobs depend on the availability of money.

Correct AnswerverifiedShow Answer

The size and strength of the U.S. economy insulates U.S. businesses from the economic problems of other countries.

Correct AnswerverifiedShow Answer

The board of governors of the Federal Reserve System determines

Correct AnswerverifiedShow Answer

By reducing the reserve requirement, the Fed intends to increase the money supply.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The strength of the U.S. dollar depends on the strength of the U.S. economy relative to the economies of other nations.

Correct AnswerverifiedShow Answer

________ occurs when goods are traded directly for other goods.

Correct AnswerverifiedShow Answer

Efficient monetary systems eliminate the use of barter.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Savings and loan associations are sometimes known as

Correct AnswerverifiedShow Answer

The Fed announces that it intends to implement policies to increase interest rates. Which of the following correctly identifies the most likely result of higher U.S. interest rates?

Correct AnswerverifiedShow Answer

By the time of the Civil War, the efficient banking system of the United States was the envy of the rest of the world.

Correct AnswerverifiedShow Answer

Banks prefer that customers use an electronic funds transfer system rather than traditional methods of payment because

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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