Question 1

As nonprofit institutions, credit unions enjoy an exemption from federal income taxes.

Accepted Answer

A) True 
 B)False

Question 2

Commercial banks offer services to depositors and borrowers.

Accepted Answer

A) True 
 B)False

Question 3

Money is anything people generally accept as payment for goods and services.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)   soon after the Civil War.
B)   in 1908, as the result of the banking panic in 1907.
C)   in 1917, as the nation entered World War I.
D)   during the Great Depression of the 1930s.E) A) and B)
F) None of the above D

Question 5

Credit unions represent nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members.

Accepted Answer

A) True 
 B)False

Question 6

A(n)  ________ accepts savings and checking account deposits and provides home mortgage loans.

Accepted Answer

A)   nonbank
B)   insurance company
C)   savings and loan association
D)   commercial finance companyE) C) and D)
F) A) and B)

Question 7

The ________ provides the same results as a check because it withdraws funds from a checking account.

Accepted Answer

A)   credit card
B)   debit card
C)   smart card
D)   cashier's checkE) All of the above
F) None of the above

Question 8

The U.S. government has done its best to create dollar bills that are easily duplicated.

Accepted Answer

A) True 
 B)False

Question 9

The International Monetary Fund assists with the smooth flow of money among nations.

Accepted Answer

A) True 
 B)False

Question 10

________ persuaded Congress to establish the first central bank in the United States.

Accepted Answer

A)   Benjamin Franklin
B)   David Farragaut
C)   Franklin Roosevelt
D)   Alexander HamiltonE) A) and B)
F) None of the above

Question 11

News reports indicate that the Fed plans to announce its third increase in the discount rate in the past five months. Additional reports suggest that the Fed may also increase the reserve requirement in the near future. Apparently the Fed perceives the number one problem facing the economy is

Accepted Answer

A)   the size of the federal deficit.
B)   unemployment.
C)   excessively high interest rates.
D)   inflation.E) A) and D)
F) All of the above

Question 12

The Fed uses ________ to regulate the money supply.

Accepted Answer

A)   stock market investments
B)   the deposit requirement
C)   the political negotiation process
D)   the discount rateE) A) and D)
F) All of the above D

Question 13

Rob works as a loan officer for a major U.S. commercial bank, specializing in international loans. When considering loans to governments and businesses in other nations, Rob

Accepted Answer

A)   must be aware of federal limits on the total amount of U.S. funds his bank can lend to foreign borrowers.
B)   can only make loans if his bank has funds in excess of those sought by American firms.
C)   is likely to approve loans to foreign borrowers if the return is high enough to justify the risk.
D)   must be careful to get approval from the International Monetary Fund.E) B) and C)
F) All of the above

Question 14

When the Fed increases the discount rate, banks

Accepted Answer

A)   must purchase more government securities.
B)   must pay a higher rate when they borrow from the Fed.
C)   will lower the rate they charge to borrowers.
D)   must hold a greater amount of funds in reserve against deposits.E) A) and C)
F) B) and C)

Question 15

Erica has three types of deposits at her credit union. She has a checking account in her own name worth $42,000, a joint savings account with her husband, which currently holds $91,000, and an IRA account worth $145,000. Her deposits are at risk because they exceed the $250,000 limit on insurance coverage by NCUA.

Accepted Answer

A) True 
 B)False

Question 16

An electronic funds transfer system (EFT) is an electronic transaction system used for paying bills, making direct deposits of paychecks, and paying for a purchase.

Accepted Answer

A) True 
 B)False  True

Question 17

The Federal Reserve establishes the tax policies of the U.S.

Accepted Answer

A) True 
 B)False

Question 18

For banks, check-processing activities

Accepted Answer

A)   still represent the cheapest way to permit customers use of their funds.
B)   are expensive and time consuming.
C)   are not trustworthy and reliable.
D)   are extremely efficient and have deterred customers from using other ways to access their funds.E) A) and B)
F) A) and C)

Question 19

Barter is the trading of goods and services for other goods and services.

Accepted Answer

A) True 
 B)False

Question 20

Commercial banks attempt to profit by using funds deposited by customers to make interest-bearing loans to borrowers.

Accepted Answer

A) True 
 B)False

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

As nonprofit institutions, credit unions enjoy an exemption from federal income taxes.

Correct Answer
verified

Commercial banks offer services to depositors and borrowers.

Correct Answer
verified

Money is anything people generally accept as payment for goods and services.

Correct Answer
verified

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

Correct Answer
verified
D

Credit unions represent nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members.

Correct Answer
verified

A(n) ________ accepts savings and checking account deposits and provides home mortgage loans.

Correct Answer
verified

The ________ provides the same results as a check because it withdraws funds from a checking account.

Correct Answer
verified

The U.S. government has done its best to create dollar bills that are easily duplicated.

Correct Answer
verified

The International Monetary Fund assists with the smooth flow of money among nations.

Correct Answer
verified

________ persuaded Congress to establish the first central bank in the United States.

Correct Answer
verified

News reports indicate that the Fed plans to announce its third increase in the discount rate in the past five months. Additional reports suggest that the Fed may also increase the reserve requirement in the near future. Apparently the Fed perceives the number one problem facing the economy is

Correct Answer
verified

The Fed uses ________ to regulate the money supply.

Correct Answer
verified
D

Rob works as a loan officer for a major U.S. commercial bank, specializing in international loans. When considering loans to governments and businesses in other nations, Rob

Correct Answer
verified

When the Fed increases the discount rate, banks

Correct Answer
verified

Correct Answer
verified

An electronic funds transfer system (EFT) is an electronic transaction system used for paying bills, making direct deposits of paychecks, and paying for a purchase.

Correct Answer
verified
True

The Federal Reserve establishes the tax policies of the U.S.

Correct Answer
verified

For banks, check-processing activities

Correct Answer
verified

Barter is the trading of goods and services for other goods and services.

Correct Answer
verified

Commercial banks attempt to profit by using funds deposited by customers to make interest-bearing loans to borrowers.

Correct Answer
verified

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

As nonprofit institutions, credit unions enjoy an exemption from federal income taxes.

Correct AnswerverifiedShow Answer

Commercial banks offer services to depositors and borrowers.

Correct AnswerverifiedShow Answer

Money is anything people generally accept as payment for goods and services.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedD

Credit unions represent nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members.

Correct AnswerverifiedShow Answer

A(n) ________ accepts savings and checking account deposits and provides home mortgage loans.

Correct AnswerverifiedShow Answer

The ________ provides the same results as a check because it withdraws funds from a checking account.

Correct AnswerverifiedShow Answer

The U.S. government has done its best to create dollar bills that are easily duplicated.

Correct AnswerverifiedShow Answer

The International Monetary Fund assists with the smooth flow of money among nations.

Correct AnswerverifiedShow Answer

________ persuaded Congress to establish the first central bank in the United States.

Correct AnswerverifiedShow Answer

News reports indicate that the Fed plans to announce its third increase in the discount rate in the past five months. Additional reports suggest that the Fed may also increase the reserve requirement in the near future. Apparently the Fed perceives the number one problem facing the economy is

Correct AnswerverifiedShow Answer

The Fed uses ________ to regulate the money supply.

Correct AnswerverifiedD

Rob works as a loan officer for a major U.S. commercial bank, specializing in international loans. When considering loans to governments and businesses in other nations, Rob

Correct AnswerverifiedShow Answer

When the Fed increases the discount rate, banks

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An electronic funds transfer system (EFT) is an electronic transaction system used for paying bills, making direct deposits of paychecks, and paying for a purchase.

Correct AnswerverifiedTrue

The Federal Reserve establishes the tax policies of the U.S.

Correct AnswerverifiedShow Answer

For banks, check-processing activities

Correct AnswerverifiedShow Answer

Barter is the trading of goods and services for other goods and services.

Correct AnswerverifiedShow Answer

Commercial banks attempt to profit by using funds deposited by customers to make interest-bearing loans to borrowers.

Correct AnswerverifiedShow Answer

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D

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D

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True

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