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

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Question 91

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

A) True
B) False

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Question 92

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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.

A) True
B) False

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Question 93

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One of the most important aspects of the banking legislation passed during the 1930s established:

Given the size and strength of the U.S.economy and the widespread use of the dollar,the Federal Reserve essentially regulates international monetary markets.

They say "hindsight is 20/20",meaning,you can usually see things more clearly,with a much better understanding,after it has occurred.And,we can say the same for the banking crisis of 2008-2010.The practices of several participants (for-profit companies,government regulators,and customers)came together to create the situation that caused the collapse of several banks,financial services companies,and corporations.

The bailouts proposed by presidents Bush and Obama totaled:

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 World Bank provides funding for:

Which of the following institutions monitors the monetary policies of member nations to ensure a global monetary system that works best for all nations?

High startup costs cause Internet banks to have higher operating costs than traditional banks.

Which of the following represents the technical name for a checking account?

Which of the following represents one way the Fed increases the amount of money in circulation?

In the early 2000s,banks took the mortgages that they owned,created mortgage-backed securities out of them,and sold them as safe investments.

Commercial and consumer finance companies specialize in making low interest loans to individuals and businesses with strong credit ratings.

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.

The problem with barter exchanges is that it is too difficult to find people to exchange your good with.

The reserve requirement represents the Fed's most powerful tool for conducting monetary policy.

When the FED increases the reserve requirement it forces banks to increase the number of loans they make.

__________ currently provides for regulating international banking and finance practices.

Springfield National Bank holds $200 million in deposits from their customers.If the Fed sets the reserve requirement at 12 percent,Springfield must hold $24 million in cash at the bank or in non-interest-bearing deposits at the local Federal Reserve district bank.