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

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Question 31

True/False

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When the U.S. was still a colony of Great Britain, land banks were created to lend money to farmers.

A) True
B) False

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Question 32

Multiple Choice

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By the time of the Civil War, the U.S. banking system operated:

A) as an efficient model that many other countries copied.
B) under the control of the first Federal Reserve System.
C) inefficiently with different banks issuing different types of currencies.
D) much the same as it does today.

E) C) and D)
F) A) and D)

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Question 33

True/False

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Prior to the establishment of the Federal Reserve System in 1913, the United States had no experience with a central bank.

For banks, the check processing activities:

When the value of the dollar falls, foreign goods become less expensive for American consumers.

Fortunately, the Troubled Assets Relief Program (TARP) took care of the looming bankruptcy problems of major financial services institutions during 2008-2009, and tax payers were not hit with additional bail-outs.

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

The insures holders of accounts in savings and loan associations.

Chipper's Golf Resort plans to carry an inventory of golf clubs - irons, drivers, and woods from a German manufacturer. The manufacturer has promised delivery in four weeks, which will be just in time for the beginning of Chipper's golf season at its Chicago course. In order to prudently watch cash flow, you have recommended that Chipper's Resort sign a letter of credit with an international bank asking the bank to disburse payment when the clubs arrive at the Chicago course and after they are inspected.

The Fed has just reduced the reserve requirement from 14% to 12%. Commerce Bank holds $650 million in deposits. It will need to become more conservative with its lending procedures because it now must hold $91 million in reserves.

Alexander Hamilton persuaded Congress to create a central bank.

A barter exchange is a system where you input into a system the goods and services that you are willing to trade, and receive trade credit.

Kimberly trades some of her homegrown tomatoes to her neighbor, Ron, for some green peppers fresh from Ron's garden. This type of trade represents an example of:

When traveling in other countries, tourists can use their MasterCard or Visa bankcards to obtain foreign currencies at ATMs.

Shana works as an investment specialist for the Teamsters Union Central States Pension Fund. Her job involves deciding how to invest the contributions paid into the fund. Which of the following statements about Shana's job are true?

Savings and loan associations are sometimes known as:

Although there are many features about online banking that customers do not care for, they are seldom concerned with the security due to continued assurances by the banking industry.

The community college where Jake works requires all employees to contribute to a pension fund. At this time, he is not too worried about the safety of this contribution because:

are nonprofit, member-owned financial cooperatives that offer a full variety of banking services such as accepting deposits and making loans.

Early in our nation's history, people generally accepted the importance of a central bank authority.