Question 1

The Federal Reserve Board controls the amount of money available in the economy:

Accepted Answer

A)  by issuing credit cards.
B)  through monetary policy.
C)  by printing new currency notes.
D)  by levying heavy taxes.
E)  through certificates of deposit.F) A) and B)
G) A) and C)

Question 2

Which of the following is true of Kickstarter?

Accepted Answer

A)  It matches investors and borrowers.
B)  It raises money for health care issues.
C)  It funds creative projects in the world of art.
D)  It raises money for personal financing needs.
E)  It raises money for causes and charities.F) None of the above
G) B) and D)

Question 3

The primary business of savings and loan associations (S&Ls) is to:

Accepted Answer

A)  offer short-term loans to large corporations.
B)  offer savings accounts.
C)  offer tax savings.
D)  insure deposits.
E)  sell life insurance.F) None of the above
G) A) and B)

Question 4

A(n) _____ underwrites new issues of securities for corporations,states,and municipalities needed to raise money in the capital markets.

Accepted Answer

A)  private accountant
B)  cashier
C)  investment banker
D)  certified public accountant
E)  certified management accountantF) D) and E)
G) B) and C)

Question 5

The Federal Reserve Board is primarily responsible for:

Accepted Answer

A)  providing short-term loans to businesses.
B)  creating a stable environment for economic growth.
C)  issuing savings accounts and certificates of deposit.
D)  regulating and chartering credit unions.
E)  imposing trade embargoes in appropriate situations.F) A) and E)
G) A) and D)

Question 6

A money market fund differs from the money market account offered by banks primarily in that the former:

Accepted Answer

A)  offers lower rates of interest than a bank money market account.
B)  represents a pool of funds,not a specialized,individual checking account.
C)  does not invest in government bonds,only securities issued by private companies.
D)  does not offer services such as check-writing privileges and reinvestment of interest income.
E)  invests exclusively in long-term debt securities issued by large corporations.F) B) and C)
G) B) and D)

Question 7

Insurance companies protect their clients against financial losses from certain specified risks in exchange for a fee,called a(n) _____.

Accepted Answer

A)  interest
B)  dividend
C)  fiat
D)  contingency fee
E)  premiumF) B) and D)
G) B) and C)

Question 8

As a measure of value,money primarily serves as a(n) :

Accepted Answer

A)  varying denominator that allows people to compare the different goods and services that can be consumed at various income levels.
B)  common standard or yardstick of the worth of goods and services.
C)  way to accumulate wealth.
D)  agent contributing to inflation.
E)  agent contributing to deflation.F) A) and C)
G) All of the above

Question 9

Which of the following effects is seen on the money supply and the economy when the Federal Reserve Board raises the discount rate?

Accepted Answer

A)  Interest rates decrease; the money supply increases; economic activity increases.
B)  Interest rates increase; the money supply decreases; economic activity slows down.
C)  Banks make more loans; the money supply increases; economic activity increases.
D)  People are encouraged to make major purchases,increasing economic activity.
E)  The money supply increases; economic activity increases.F) A) and B)
G) A) and E)

Question 10

To be used as a medium of exchange,money must be:

Accepted Answer

A)  non-portable.
B)  durable.
C)  imitable.
D)  indivisible.
E)  flexible.F) B) and E)
G) A) and B) B

Question 11

A nonbanking financial institution that buys and sells stocks,bonds,and other securities for its customers is called a(n) :

Accepted Answer

A)  finance company.
B)  credit union.
C)  mutual savings bank.
D)  brokerage firm.
E)  thrift bank.F) C) and E)
G) A) and B)

Question 12

The Federal Reserve Board was established by Congress in 1913 to:

Accepted Answer

A)  provide benefits to retirees and the unemployed.
B)  regulate corporate money laundering.
C)  collect taxes and enforce the Internal Revenue Code.
D)  regulate the banking industry.
E)  facilitate global monetary cooperation.F) A) and B)
G) A) and C) D

Question 13

According to the Federal Reserve Board,what is the estimated life span of $1 notes?

Accepted Answer

A)  3.7 years
B)  1.3 years
C)  4.9 years
D)  5.9 years
E)  7.7 yearsF) B) and E)
G) A) and B)

Question 14

_____ is best described as a paper money that is not readily convertible to a precious metal such as gold.

Accepted Answer

A)  A bitcoin
B)  A credit card
C)  A debit card
D)  Plastic money
E)  Fiat moneyF) C) and E)
G) None of the above

Question 15

A(n) _____ is a loan made so that a business or individual can purchase real estate,typically a home.

Accepted Answer

A)  credit
B)  mortgage
C)  insurance
D)  thrift
E)  debitF) B) and E)
G) None of the above

Question 16

Open market operations refer to decisions to:

Accepted Answer

A)  buy or sell U.S.Treasury bills and other investments in the open market.
B)  issue savings accounts and certificates of deposit in the open market.
C)  regulate and charter credit unions in the open market.
D)  set a credit limit for the credit cards.
E)  regulate income tax rates for the open market.F) B) and E)
G) B) and C) A

Question 17

Savings accounts are also known as:

Accepted Answer

A)  interest deposits.
B)  term deposits.
C)  demand deposits.
D)  time deposits.
E)  certificates of deposit.F) B) and C)
G) A) and D)

Question 18

Certificates of deposit are accounts with funds that usually cannot be withdrawn without advance notice and/or have limits on the number of withdrawals per period.

Accepted Answer

A) True 
 B)False

Question 19

_____,a form of electronic banking,allow financial institutions to reduce costs by facilitating "paperless" transactions.

Accepted Answer

A)  Credit cards
B)  Automated teller machines
C)  Overnight deposit boxes
D)  Money orders
E)  ChecksF) All of the above
G) D) and E)

Question 20

The acronym NOW,when used by financial institutions,stands for _____ and is a type of interest-bearing checking account.

Accepted Answer

A)  Near Order Withdrawal
B)  Negotiable Order of Waiver
C)  Near Order of Waiver
D)  Negotiable Order of Withdrawal
E)  Negative Order of WithdrawalF) C) and D)
G) B) and E)

Exam 15: Money and the Financial System

The Federal Reserve Board controls the amount of money available in the economy:

Correct AnswerverifiedShow Answer

Which of the following is true of Kickstarter?

Correct AnswerverifiedShow Answer

The primary business of savings and loan associations (S&Ls) is to:

Correct AnswerverifiedShow Answer

A(n) _____ underwrites new issues of securities for corporations,states,and municipalities needed to raise money in the capital markets.

Correct AnswerverifiedShow Answer

The Federal Reserve Board is primarily responsible for:

Correct AnswerverifiedShow Answer

A money market fund differs from the money market account offered by banks primarily in that the former:

Correct AnswerverifiedShow Answer

Insurance companies protect their clients against financial losses from certain specified risks in exchange for a fee,called a(n) _____.

Correct AnswerverifiedShow Answer

As a measure of value,money primarily serves as a(n) :

Correct AnswerverifiedShow Answer

Which of the following effects is seen on the money supply and the economy when the Federal Reserve Board raises the discount rate?

Correct AnswerverifiedShow Answer

To be used as a medium of exchange,money must be:

Correct AnswerverifiedB

A nonbanking financial institution that buys and sells stocks,bonds,and other securities for its customers is called a(n) :

Correct AnswerverifiedShow Answer

The Federal Reserve Board was established by Congress in 1913 to:

Correct AnswerverifiedD

According to the Federal Reserve Board,what is the estimated life span of $1 notes?

Correct AnswerverifiedShow Answer

_____ is best described as a paper money that is not readily convertible to a precious metal such as gold.

Correct AnswerverifiedShow Answer

A(n) _____ is a loan made so that a business or individual can purchase real estate,typically a home.

Correct AnswerverifiedShow Answer

Open market operations refer to decisions to:

Correct AnswerverifiedA

Savings accounts are also known as:

Correct AnswerverifiedShow Answer

Certificates of deposit are accounts with funds that usually cannot be withdrawn without advance notice and/or have limits on the number of withdrawals per period.

Correct AnswerverifiedShow Answer

_____,a form of electronic banking,allow financial institutions to reduce costs by facilitating "paperless" transactions.

Correct AnswerverifiedShow Answer

The acronym NOW,when used by financial institutions,stands for _____ and is a type of interest-bearing checking account.

Correct AnswerverifiedShow Answer

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B

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D

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A

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