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

During the early 1980s,the federal government responded to the severe problems plaguing savings and loan associations by:

A "run on the bank" occurs when large numbers of depositors lose faith in the banking system and withdraw their deposits.

Which of the following historical events motivated Congress to establish the Federal Reserve System?

Economic growth and the creation of jobs depend on the availability of money.

International bankers make loans wherever they can get the maximum return for their money.

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

Lower fees and better interest rates motivate customers to open accounts with Internet banks.However,the lack of personal service and concern for information security encourages some customers to return to a traditional bank.

Both the M-1 and M-2 definitions of money include coins and paper money.

There is much speculation that prior to the banking crisis of 2008-2010,the Fed (Federal Reserve System)and the SEC (Securities and Exchange Commission)were not enforcing the regulations they were charged to enforce.

Although there are many new ways to perform electronic funds transfer,legally,the only way that an employer can pay an employee is by writing a check.

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

The Fed bought several billion dollars worth of U.S.government securities.The purpose of this action is to:

Theoretically,with the proper monetary policy,the U.S.economy can continue to grow without causing inflation.

An increase in the rate of inflation would likely result from a(n):

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

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

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.The total amount for which the National Credit Union Administration (NCUA)would insure these deposits would be:

Chipper's Golf Resort plans to use famous Kauri wood from New Zealand for parts of the interior of the magnificent club house at its new golf resort near Portland,OR.According to the importer,each ten foot slab will cost Chipper's approximately $5,000.Looking at the exchange rates,Chipper's finance director noted that $500 US dollars = $738 NZ dollars.The importer will order directly from his source in New Zealand.Chipper's finance director has determined that:

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

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