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

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Question 161

True/False

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The Fed commonly buys or sells U.S.government securities to regulate the money supply.

A) True
B) False

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Question 162

Multiple Choice

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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.

A) smart card
B) RFID tag
C) credit card
D) automatic key

E) B) and C)
F) A) and B)

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Question 163

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Juan has an authorized work permit issued by the U.S.government to work in the U.S.Each day,Juan travels from Mexico to El Paso,TX,to work in the construction trade.At the time that he was first employed his U.S.employer issued him a(n) ___________.Each week,the employer scans his work stipend onto it.Juan can purchase with it,access cash through an ATM with it,and transfer funds with it.The risk for Juan is:

Damian has played supporting roles in a number of movies and is also passionate about his craft to the point where he created a home theatre inside his house.He has a satellite dish where he receives an unlimited number of movies,and he also has an online account with Netflix™ and Blockbuster™.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.

Designed to create more confidence in banking institutions,the FDIC was established:

Critics of the World Bank charge the organization with:

For banks,the check processing activities:

Real dollars are made with various lines of colors such as peach and blue.They have art work that is off-center,and there are other identifiable watermarks for the purpose of making replication quite easy.

Some automatic teller machines (ATMs)allow users to pick up concert tickets and download music files.

Savings and loan company failures soared in the early 1980s because:

Which of the following reduces the costs involved with the Federal Reserve's check-clearing role?

As is common payroll procedure for most employers,Marissa's company _____________ her paycheck bi-monthly into her checking account.This is a paperless process and no check is issued to the employee.By logging into her personnel system,Marissa has record of the net pay that was deposited into her personal checking account and an account of how much was taken out for taxes,Medicare,social security (FICA) and other deductions.Marissa's company has adopted an efficient _________ system.

Due to the fact that investors did not individually purchase MBSs (mortgage-backed securities)in their investment accounts,they remained unaffected when the value of some of these investments became worthless.

The M-1 money supply includes money in savings accounts,mutual funds,and money market accounts.

Typically,banks impose a service charge for check-writing privileges or demand a minimum deposit.

In an electronic funds transfer (EFT)system,the information of a transaction is communicated from one computer to another.

When the Fed increases the reserve requirement,banks make fewer loans.

The interest paid on time deposits,today,represents the main difference between time and demand deposits.

When the Federal Reserve pursues policies that increase interest rates,the amount of foreign funds flowing into the United States also increases.

Last week Dave was looking for a place to deposit a $30,000 inheritance from his Great Aunt Martha who passed away three months ago.Although he does not plan to spend his money frivolously,he will need part of the funds from time to time for his college education - something he promised Great Aunt Martha he would achieve.After speaking with several sales consultants in banking and nonbank institutions,he likes the fact that he can open a stock brokerage account and a money-market account at Goodman Stacks Investment Company (a nonbank company),and will be issued checks for paying bills.You remind him that with the recent mergers between banking and nonbank institutions,he may be able to find a company that provides (both)the convenience of banking services (ATM,cash availability)and low risk/high risk securities products.