GEB Chapter 20

b

Which of the following organizations would be considered a nonbank institution? a) Educational Employees Credit Union b) Missouri Public School Retirement System c) Southwest Savings Bank d) Heartland Bank

c

In referring to the money supply, which of the following is money that can be accessed quickly and easily, and includes coins and paper money as well as checks? a) M-2 b) M-4 c) M-1 d) M-3

a

The bank failures of 1907 and the resulting cash shortage problems led to the creation of: a) the Federal Reserve System. b) the money supply. c) the gold standard. d) monetary policy.

a

Too much money chasing too few goods is characterized by the term ________. a) inflation b) deflation c) recession d) monetary policy

a

An increase in the discount rate would have the effect of ________. a) tightening of the money supply b) more people wanting to borrow money c) more businesses wanting to borrow money d) loosening of the money supply

d

The bank failures that were occurring in 1930s due to the effects of the Great Depression led to the creation of: a) laws which prevented banks from failing. b) nonbanks. c) the Federal Reserve System. d) federal deposit insurance.

b

The open-market committee of the Federal Reserve announced that it plans to sell more government bonds to the public. This action will likely ________. a) change fiscal policy b) decrease the supply of money c) increase the supply of money d) decrease the supply of bonds

b

Online banking: a) has higher expenses because administrators of the online systems and software designers must be hired. b) will most likely continue in financial institutions that offer traditional banking facilities as well as online services. c) allows customers to do all financial transactions from home at no cost. d) has grown unpopular and is not expected to grow much further.

a

One of the newest electronic conveniences is the ________, which can serve as a credit card, a debit card, and even unlock doors. RFID technology and GPS technology are used in some of these. a) smart card b) ATM c) IMF d) ETF

a

Today many people have found that bartering: a) can be done somewhat easily online. b) has become obsolete in most countries. c) has become more difficult because it’s hard to find people with whom to barter. d) has been eliminated by the ease of cash transactions.

d

Competition between banks and nonbanks, such as insurance companies and pension funds, has: a) not changed in 50 years, since the creation of the Federal Reserve System. b) decreased with the deregulation of the banking industry. c) stabilized with the economic crisis beginning in 2008. d) increased significantly as nonbanks offer many of the services provided by regular banks.

b

Cooperative monetary policies designed to stabilize currency exchanges among 188 countries are coordinated through which of the following organizations? a) United Nations b) International Monetary Fund c) International Banking Union d) NATO

a

A ________ is a way of conducting business in global markets that promises a bank will pay some specified amount at a particular time, with no specific conditions imposed. a) banker’s acceptance b) money exchange c) guarantee a certain exchange rate d) letter of credit offer

a

If the government or its representative agency were to take money out of the economy, which of the following might occur? a) Prices would decrease on goods and services. b) The unemployment rate in the economy would stabilize. c) Prices would increase on the goods that remained for purchase. d) Another Great Depression, and this is why governments do not take this action.

b

Which of the following would not be included in a list of characteristics of money? a) Stability b) Usability c) Divisibility d) Portability

b

If the economy of a nation such as Greece is faltering, the value of its associated currency, the euro, is likely to ________. a) gain strength against economies whose economic strength is greater than Greece b) decline in strength as well c) not be affected due to all the other nations who also trade with this common currency d) respond in the inverse. It will gain strength

d

Funds in savings and loan institutions are protected by: a) National Credit Union Association (NCUA). b) Federal Savings and Trust Association. c) Federal Deposit Insurance Corporation (FDIC). d) Savings Association Insurance Fund (SAIF).

b

While searching for the best interest rate on a certificate of deposit, Kyle noted that two online banks had better rates than traditional banks that had physical presence in his town. A logical reason why these banks were offering higher interest for depositors is ________. a) the traditional banks are not making as many home loans as they did in the past, which eats into their profits b) online banks do not have the overhead and labor costs that traditional banks must cover. With expenses at a minimum, they can pass along that savings to depositors c) online banking may pay higher interest rates according to federal banking rules d) the traditional banks have more customers, which translates into more expenses per custome

d

All federally chartered banks are required to join the Federal Reserve System, as mandated by the ________. a) Federal Bank Adjustment Act of 1927 b) Federal Policy Act c) Federal Monetary Act d) Federal Reserve Act of 1913

a

The ________ focuses on economic development throughout the world, with emphasis on emerging economies. a) World Bank b) Federal Reserve Bank c) International Monetary Fund d) Bank of the Americas

a

The technical name for a savings account is a: a) time deposit. b) deposit insurance. c) certificate of deposit. d) demand deposit.

a

The goal of the commercial bank is to: a) generate more revenue from loans than it pays out in interest to depositors. b) decrease interest rate payments made by borrowers and increase interest payments to depositors. c) decrease the need to loan money and only focus on paying interest to depositors. d) generate more interest from depositors than it pays out to borrowers.

a

If the Fed were to increase the reserve requirement, which of the following would occur? a) Banks would be required to increase the amount of money they physically keep in their vaults. b) The funds cash flow requirement would significantly increase, which would increase the money supply. c) The economy would stabilize and fall to zero inflation. d) The reservation of promised capital would be reduced.

a

When the Fed buys and sells U.S. government bonds in an effort to regulate the money supply, it is engaged in ________. a) open-market operations b) reserve equity strategy c) federal fund rates adjustment d) closed market practices

c

Most commercial banks offer their depositors protection. At this time, bank deposits are insured by the FDIC (Federal Deposit Insurance Corporation) up to ________. a) $150,000 b) $2,000,000 c) $250,000 d) $100,000