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

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Question 41

Multiple Choice

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Xavier deposited $75,000 in various individual accounts at his local credit union.He and his wife also have a joint savings account worth $34,500.What portion of these deposits is insured?

A) $0,because the NCUA does not insure individual credit union deposits.
B) $73,220
C) $100,000
D) $109,500

E) B) and C)
F) None of the above

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Question 42

Multiple Choice

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Designed to create more confidence in banking institutions,the FDIC was established:

A) soon after the Civil War.
B) in 1908,as the result of the banking panic in 1907.
C) in 1917,as the nation entered World War I.
D) during the Great Depression of the 1930s.

E) B) and D)
F) B) and C)

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Question 43

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Historically,coins and paper money complicated the exchange process.

Pension funds invest monies contributed by employers and/or employees for the benefit of their members' retirement.

The Federal Reserve is the "bankers' bank."

The World Bank primarily finances projects to improve the productivity and standard of living in less-developed nations.

The rate of interest charged by the Federal Reserve is called the federal funds rate.

Barter is the trading of goods and services for other goods and services.

A debit card is better than a credit card because it allows the purchaser to float a short-term loan,until the credit card company sends the bills at the end of the month.

If you are trying to sell your state-of-the-art bicycles into the Japanese market,you are likely to sell more bicycles if the dollar has strength against the Japanese yen.

A letter of credit represents a promise that a bank will disburse a specified amount of funds at a particular time if certain conditions are met.

From a bank's point of view,debit cards and credit cards are treated in identical ways.

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

Brokerage firms now compete with commercial banks by offering high-yield combination savings and checking accounts.

By reducing the reserve requirement,the Fed intends to increase the money supply.

When the Fed increases the reserve requirement,banks make fewer loans.

Newspapers in the nation of St.Lunatic report a significant increase in money supply during the past few months.This information indicates that St.Lunatic may experience a serious recession in the near future.

Commercial banks primarily serve two types of customers:

Depositors represent a bank's primary responsibility,while borrowing customers are secondary.

Damian has played supporting roles in a number of movies and is also passionate about his craft to the point where he created a home theatre inside his house.He has a satellite dish where he receives an unlimited number of movies,and he also has an online account with Netflix™ and Blockbuster™.For added convenience,he has set-up direct payment to these companies.This means when his statement arrives each month,he will get online and tell his bank how much to pay these vendors.