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

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Question 141

Multiple Choice

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The organization responsible for conducting monetary policy in the United States is the:

A) Federal Trade Commission.
B) Council of Economic Advisors.
C) Federal Reserve System.
D) Federal Monetary Control Authority.

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

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Question 142

True/False

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More than ever,the American economy operates as a distinctly separate entity from the international economy.

A) True
B) False

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Question 143

Multiple Choice

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A significant decrease in the money supply tends to:

A savings and loan association (S&L)is a financial institution that accepts both savings and checking deposits and provides home mortgage loans.

Compare and contrast the functions of the World Bank and the International Monetary Fund.

When the value of the dollar increases relative to the euro,the number of U.S.dollars needed to purchase a bottle of French wine decreases.

Coins and bills are portable and durable.

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

Next month,Commerce Bank plans to increase the amount of new loans it makes.As a member bank of the Federal Reserve,Commerce can borrow from the Fed.Commerce will charge the customer an interest amount greater than the discount rate.

Both checks and debit cards will immediately transfers funds from the customer's account to the seller's account.

Alan 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,Alan:

The interest paid on time deposits,today,represents the main difference between time and demand deposits.

Tracing the cause of the banking crisis of 2008-2010,which of the following organizations is not in the news as having been a contributor to the crisis?

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

Several European countries report a significant decrease in the level of jobs,income,and production of goods and services.The size and strength of the U.S.economy insulates U.S.businesses from the economic problems of other countries.

Abdul Industries wants to import some heavy machinery from a producer located in the Czech Republic.To facilitate payment to the Czech firm,Abdul arranged for its bank to issue a banker's acceptance.Under this arrangement,the bank pays the exporter after the equipment passes inspection.

Mini-Case The Bank of Bramblewood survived the Great Depression through the dedication,hard work,and conservative practices of its first president,Red E.Kash.Indeed,Red's personal drive and business skills helped the Bank of Bramblewood thrive during his 50-year tenure as president.After his retirement his granddaughter,Patty,took a position with the bank.Patty inherited her grandfather's business skills and by 1994 she had risen to become the second member of the Kash family to head the bank. Patty admits she owes a great deal to her grandfather's leadership and advice,but she also quickly points out that the banking industry has changed significantly since Red retired.Patty graduated from college with a degree in finance,and also holds several certifications with the American Institute of Banking."What Granddad achieved during his era was truly remarkable," Patty points out."But times have changed,and banking regulations and bank competitors have certainly changed.If we hope to prosper in this century we have to adjust to new competition,learn to work with new technologies,and take advantage of new opportunities.The Bank of Bramblewood has always operated for the benefit of our customers and we will continue to do so.But we must serve them more efficiently and creatively than in the past." -Patty supports a sustainability initiative at her bank to be paperless.Each time the bank issues checks or sends out a paper statement,it includes a promotion asking customers to support methods that eliminates paperwork.She encourages customers to use debit cards,smart cards,direct deposit and direct payments,as well as online statement retrieval.All of these tools are used in conjunction with the bank's _______________.

Commercial banks operate as nonprofit institutions.

Pleased with the service provided by a national brokerage house when he bought and sold stocks and bonds,Ted would like to have this brokerage firm handle more of his financial needs.If Ted explores the services offered by such firms in more depth,he will find that:

Great news! The Fed just announced that the discount rate will rise by as much as 1% over the next three months.This will make it easier for Ben,the owner of a laser engraving business,to borrow money for that new piece of equipment he needs.