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

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Question 71

Multiple Choice

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When the Fed buys U.S.government securities,the:

A) size of the federal deficit falls.
B) discount rate rises.
C) money supply increases.
D) banking system loses reserves.

E) A) and D)
F) B) and D)

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Question 72

Multiple Choice

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A comparison of an interest-bearing checking account and a savings account reveals that:

A) while a NOW account pays interest,a savings account does not.
B) a NOW account must be held to maturity,while funds in a savings account are available on demand.
C) deposits in checking accounts are technically demand deposits,but deposits in savings accounts are time deposits.
D) interest earned on NOW accounts is tax deductible,while interest earned on passbook savings accounts is taxable income.

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

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Question 73

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

___________ replace the typical magnetic strip on a credit or debit card with a microprocessor.

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 recent banking crisis.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 International Monetary Fund assists with the smooth flow of money among nations.

A significant increase in the money supply creates inflationary pressures in the economy.

The money supply represents the amount of money the Federal Reserve Bank makes available for people to buy goods and services.

The President of the U.S.is in control of the money supply in the U.S.

Which of the following represents a nonbank?

Smart cards contain a microprocessor chip that stores information about the user,such as drivers' license data and bank balance.

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

The strength of the U.S.money system rests on the silver content of the coins.

The Fed announces that it intends to implement policies to increase interest rates.Which of the following correctly identifies the most likely result of higher U.S.interest rates?

Which of the following is not included in the M-1 or M-2 definitions of the money supply?

Thanks in part to the Federal Reserve System,few banks failed during the Great Depression.

After years of banking with Quality Bank and Trust,Saul decided to switch to a competing institution.Thanks to changes in government regulation,his search will uncover a variety of options,however,he will also learn that banks and nonbanks have merged in order to be more competitive in the banking and financial services industries,which may or may not increase his options.

The theme of the Reaching Beyond Our Borders box titled,"New Issues Facing World Bank and the IMF," reflects upon:

Which of the following represent an independent agency of the U.S.government that insures bank deposits?

An increase in the discount rate produces a decrease in money supply.