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

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Question 101

True/False

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Commercial banks offer services to depositors and borrowers.

A) True
B) False

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Question 102

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The people living on the island nation of Wacki-ki readily accept a certain type of seashell as payment for the goods and services they trade.For Wackians (the name of Wacki-ki natives),seashells serve as money.

A) True
B) False

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Question 103

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____________ represent money set aside by corporations,nonprofit organizations,or unions to cover part of the retirement needs of their members.

A newer product is the payroll debit card.It is cheaper for employers to load your paycheck on a debit card than to cut a check.This is convenient for customers who do not qualify for a regular debit or credit card,because they can use it to pay bills,do online purchasing and even get cash from an ATM machine.

Barry has $22,000 in a savings account with the Scott Credit Union.While economic conditions have caused all financial institutions to struggle,Barry feels that his money is safe due to the fact that the credit union's accounts are protected by the:

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

The ________ insures holders of accounts in savings and loan associations.

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." -During Red's time as head of the Bank of Bramblewood,the bank offered three services: time deposits,demand deposits,and home and business loans.Under Patty's leadership,the bank offers those services,a variety of investment opportunities such as mutual funds and bonds,and they are set-up to provide ___________ through the Internet which may involve a number of services such as paying bills directly from one's account,or transferring money from one account to another.

Inflation occurs in an economy with too little money chasing too many goods.

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?

International bankers prefer to invest in their own countries whenever possible.

The Federal Reserve requires that ATM machines be located within 100 yards of a commercial bank.

Economic events in other nations seldom impact the powerful U.S.economy.

When the value of the euro increases compared to the U.S.dollar,the price of U.S.exports to Europe will decrease.

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.

The FDIC exists to maintain the public's confidence in the banking system.

__________ represents the most commonly used definition of the money supply.

The technical name for a savings account is a:

Bob read a newspaper story that indicated a dramatic increase in money market accounts and certificates of deposit during the last three months.The story reported that all other major components of the U.S.money supply remained unchanged.Based on this information,Bob can conclude that for the past quarter:

The Federal Reserve represents a "bankers' bank" because: