Question 1

When traveling in other countries,tourists can use their MasterCard or Visa bankcards to obtain foreign currencies at ATMs.

Accepted Answer

A) True 
 B)False  True

Question 2

GO-tags,a new product introduced by First Data,Inc.sports a small chip with a radio-transmitter that permits the user to tap a small card against a machine and transfer funds from the card to the vendor's account.

Accepted Answer

A) True 
 B)False  True

Question 3

The board of governors of the Federal Reserve System determines:

Accepted Answer

A) exchange rates. 
B) U.S.monetary policy. 
C) and monitors the inflows and outflows of gold reserves to ensure a stable money supply. 
D) how much money the U.S.will loan to foreign governments. 
A) exchange rates. 
B) U.S.monetary policy. 
C) and monitors the inflows and outflows of gold reserves to ensure a stable money supply. 
D) how much money the U.S.will loan to foreign governments. B

Question 4

The President of the U.S appoints the members of the Federal Reserve's board of governors.

Accepted Answer

A) True 
 B)False

Question 5

Alexander Hamilton persuaded Congress to create a central bank.

Accepted Answer

A) True 
 B)False

Question 6

Changes in the money supply produce little or no change in inflation,employment and economic growth.

Accepted Answer

A) True 
 B)False

Question 7

The electronic transfer of money increases the Federal Reserve's check-clearing operations.

Accepted Answer

A) True 
 B)False

Question 8

Hottie Potatee,a popular chain of urban potato-bars buys its multi-processing ovens from a German company.With its current push for expansion,the company has signed a ___________ with Across-the-Pond,Inc. ,Global Banking Company,to issue payment to the German manufacturer,once the ovens are installed and Hottie Potatee is assured that the ovens meet its quality assurance standards.

Accepted Answer

A) banker's coverage 
B) smart card 
C) actuarial front 
D) letter of credit 
A) banker's coverage 
B) smart card 
C) actuarial front 
D) letter of credit

Question 9

________ involves the Fed buying and selling U.S.government securities to increase or decrease the money supply.

Accepted Answer

A) Discounting 
B) Reserve requirements 
C) Deficit funding 
D) Open-market operations 
A) Discounting 
B) Reserve requirements 
C) Deficit funding 
D) Open-market operations

Question 10

The National Credit Union Administration provides coverage up to $250,000 per individual depositor at each credit union.

Accepted Answer

A) True 
 B)False

Question 11

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.

Accepted Answer

A) True 
 B)False

Question 12

Existing regulations prohibit Internet banking activities unless the bank also operates a traditional brick-and-mortar facility.

Accepted Answer

A) True 
 B)False

Question 13

Andrea has three types of deposits at her credit union.She has a checking account in her own name worth $32,000,a joint savings account with her husband,which currently holds $95,000,and an IRA account worth $125,449.Her deposits are at risk because they exceed the $250,000 limit on insurance coverage by NCU
A.

Accepted Answer

A) True 
 B)False

Question 14

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?

Accepted Answer

A) She works for a bank. 
B) She will probably invest most of the pension's funds in safe corporate stocks and other conservative investments such as government securities. 
C) In order to qualify for maximum tax benefits,the funds Shana invests all must be contributed by the companies who employ members of the Teamsters Union,rather than by the union members themselves. 
D) The purpose of the investments Shana is making is to increase the current pay of union members. 
A) She works for a bank. 
B) She will probably invest most of the pension's funds in safe corporate stocks and other conservative investments such as government securities. 
C) In order to qualify for maximum tax benefits,the funds Shana invests all must be contributed by the companies who employ members of the Teamsters Union,rather than by the union members themselves. 
D) The purpose of the investments Shana is making is to increase the current pay of union members.

Question 15

Payroll debit cards:

Accepted Answer

A) are protected if lost or stolen. 
B) have limited use because they can only act as a credit card,and the recipient does not have access to cash. 
C) must go through the Federal Reserve's Automated Clearing House system. 
D) can be issued to persons without bank accounts who can use it to pay bills online,or access cash from an ATM machine. 
A) are protected if lost or stolen. 
B) have limited use because they can only act as a credit card,and the recipient does not have access to cash. 
C) must go through the Federal Reserve's Automated Clearing House system. 
D) can be issued to persons without bank accounts who can use it to pay bills online,or access cash from an ATM machine.

Question 16

To decrease the money supply,the Federal Reserve sells U.S.government bonds in open-market operations.

Accepted Answer

A) True 
 B)False

Question 17

The community college where Jake works requires all employees to contribute to a pension fund.At this time,he is not too worried about the safety of this contribution because:

Accepted Answer

A) the pensions fund's investments are always backed by the full faith and credit of the U.S.government. 
B) pension funds are provided by nonbanks so they are not going to take this money and lend it to others. 
C) he is considered a state employee,and as such,he is protected from this fund going bankrupt. 
D) pension funds usually make conservative investments. 
A) the pensions fund's investments are always backed by the full faith and credit of the U.S.government. 
B) pension funds are provided by nonbanks so they are not going to take this money and lend it to others. 
C) he is considered a state employee,and as such,he is protected from this fund going bankrupt. 
D) pension funds usually make conservative investments.

Question 18

Which of the following statements best summarizes the difference between M-1 and M-2?

Accepted Answer

A) The M-1 definition of the money supply considers only domestic currencies while the M-2 definition includes foreign currencies. 
B) The M-1 definition consists of "hard" currencies which are backed by gold and silver,while M-2 consists of "soft" currencies which are not backed by gold and silver. 
C) The M-2 definition includes everything in the M-1 definition,plus additional components such as money in savings accounts,money market accounts,and certificates of deposit. 
D) The M-1 money supply consists only of the currency coins and paper money)that circulates in our economy,while the M-2 includes traveler's checks and funds in demand deposits. 
A) The M-1 definition of the money supply considers only domestic currencies while the M-2 definition includes foreign currencies. 
B) The M-1 definition consists of "hard" currencies which are backed by gold and silver,while M-2 consists of "soft" currencies which are not backed by gold and silver. 
C) The M-2 definition includes everything in the M-1 definition,plus additional components such as money in savings accounts,money market accounts,and certificates of deposit. 
D) The M-1 money supply consists only of the currency coins and paper money)that circulates in our economy,while the M-2 includes traveler's checks and funds in demand deposits.

Question 19

Early settlers of the New World relied heavily on barter because:

Accepted Answer

A) they found barter more convenient than the use of money. 
B) strict laws limited the number of coins that could be brought into the colonies. 
C) money had not yet evolved. 
D) they wanted to protest against British control of the banking system. 
A) they found barter more convenient than the use of money. 
B) strict laws limited the number of coins that could be brought into the colonies. 
C) money had not yet evolved. 
D) they wanted to protest against British control of the banking system.

Question 20

Historically,there was ________ a central bank in the U.S.

Accepted Answer

A) very little resistance to 
B) resistance to 
C) insufficient funding of 
D) disinterest in 
A) very little resistance to 
B) resistance to 
C) insufficient funding of 
D) disinterest in

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

When traveling in other countries,tourists can use their MasterCard or Visa bankcards to obtain foreign currencies at ATMs.

GO-tags,a new product introduced by First Data,Inc.sports a small chip with a radio-transmitter that permits the user to tap a small card against a machine and transfer funds from the card to the vendor's account.

The board of governors of the Federal Reserve System determines:

The President of the U.S appoints the members of the Federal Reserve's board of governors.

Alexander Hamilton persuaded Congress to create a central bank.

Changes in the money supply produce little or no change in inflation,employment and economic growth.

The electronic transfer of money increases the Federal Reserve's check-clearing operations.

________ involves the Fed buying and selling U.S.government securities to increase or decrease the money supply.

The National Credit Union Administration provides coverage up to $250,000 per individual depositor at each credit union.

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.

Existing regulations prohibit Internet banking activities unless the bank also operates a traditional brick-and-mortar facility.

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?

Payroll debit cards:

To decrease the money supply,the Federal Reserve sells U.S.government bonds in open-market operations.

The community college where Jake works requires all employees to contribute to a pension fund.At this time,he is not too worried about the safety of this contribution because:

Which of the following statements best summarizes the difference between M-1 and M-2?

Early settlers of the New World relied heavily on barter because:

Historically,there was ________ a central bank in the U.S.

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding Economics and How It Affects Business

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

How to Form a Business

Entrepreneurship and Starting a Small Business

Management and Leadership

Structuring Organizations for Todays Challenges

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Union and Employeemanagement Issues

Marketing: Helping Buyers Buy

Developing and Pricing Goods and Services

Distributing Products

Using Effective Promotions

Understanding Accounting and Financial Information

Financial Management

Using Securities Markets for Financing and Investing Opportunities

test Planning Table for Bonus Chapter A

Using Technology to Manage Information

Managing Risk

Managing Personal Finances

Filters