Question 1

Which of the following statements best describes the unintended consequences of usury ceilings?

Accepted Answer

A) Usury ceilings placed above equilibrium increase the quantity supplied of loans and decrease the quantity demanded of loans. This creates a shortage. 
B) Usury ceilings cause the demand for loans to increase. Since supply does not increase, a shortage emerges. 
C) Usury ceilings placed below the equilibrium interest rate cause the quantity demanded of loans to be greater than the quantity supplied. As a result, there is a shortage. 
D) Usury ceilings cause the demand curve to shift rightward and the supply curve to shift leftward. As a result, the market no longer clears and a shortage of loans develops. 
A) Usury ceilings placed above equilibrium increase the quantity supplied of loans and decrease the quantity demanded of loans. This creates a shortage. 
B) Usury ceilings cause the demand for loans to increase. Since supply does not increase, a shortage emerges. 
C) Usury ceilings placed below the equilibrium interest rate cause the quantity demanded of loans to be greater than the quantity supplied. As a result, there is a shortage. 
D) Usury ceilings cause the demand curve to shift rightward and the supply curve to shift leftward. As a result, the market no longer clears and a shortage of loans develops.

Question 2

Which of the following was not a provision of the Financial Institutions Reform, Recovery, and Enforcement Act?

Accepted Answer

A) the creation of the Office of Thrift Supervision 
B) deposit insurance being made a full faith and credit obligation of the federal government 
C) the creation of the Federal Home Loan Bank Board 
D) The creation of the Resolution Trust Corporation 
A) the creation of the Office of Thrift Supervision 
B) deposit insurance being made a full faith and credit obligation of the federal government 
C) the creation of the Federal Home Loan Bank Board 
D) The creation of the Resolution Trust Corporation

Question 3

Which of the following did not contribute to the passage of Depository Institutions Deregulation and Monetary Control Act (DIDMCA) in 1980?

Accepted Answer

A) inflation 
B) technological advances 
C) volatile financial environment 
D) low interest rates 
A) inflation 
B) technological advances 
C) volatile financial environment 
D) low interest rates

Question 4

The Federal Trade Commission

Accepted Answer

A) regulates the assets and liabilities of finance companies. 
B) regulates finance companies with regard to consumer protection. 
C) grants charters to finance companies to open an office. 
D) All of the above are correct. 
A) regulates the assets and liabilities of finance companies. 
B) regulates finance companies with regard to consumer protection. 
C) grants charters to finance companies to open an office. 
D) All of the above are correct.

Question 5

The Garn-St. Germain Depository Institutions Act was passed in order to

Accepted Answer

A) speed up the pace of deregulation. 
B) allow depository institutions the ability to offer money market deposit accounts and Super NOW accounts. 
C) help depository institutions compete with money market mutual funds. 
D) All of the above are correct. 
A) speed up the pace of deregulation. 
B) allow depository institutions the ability to offer money market deposit accounts and Super NOW accounts. 
C) help depository institutions compete with money market mutual funds. 
D) All of the above are correct.

Question 6

Which act imposed uniform capital standards among twelve countries?

Accepted Answer

A) The Basel Accord of 1988 
B) The Financial Institutions Reform, Recovery, and Enforcement Act (FIRRE
A)  of 1989 
C) The Federal Deposit Insurance Corporation Improvement Act (FDICI
A)  of 1991 
D) The Interstate Banking and Branching Efficiency Act (IBBE
A)  of 1994 
A) The Basel Accord of 1988 
B) The Financial Institutions Reform, Recovery, and Enforcement Act (FIRRE
A)  of 1989 
C) The Federal Deposit Insurance Corporation Improvement Act (FDICI
A)  of 1991 
D) The Interstate Banking and Branching Efficiency Act (IBBE
A)  of 1994

Question 7

The ________________________ insures the portfolio of retail customers of brokerage firms for up to $500,000 if the brokerage firm becomes insolvent.

Accepted Answer

A) Securities and Exchange Commission (SE
C)  
B) Federal Trade Commission 
C) Securities Investor Protection Corporation 
D) FDIC 
A) Securities and Exchange Commission (SE
C)  
B) Federal Trade Commission 
C) Securities Investor Protection Corporation 
D) FDIC

Question 8

The government agency that oversees securities markets, including brokers and dealers, is which of the following?

Accepted Answer

A) the Fed 
B) the Department of Labor 
C) the Securities and Exchange Commission (SE
C)  
D) the National Association of Securities Dealers 
A) the Fed 
B) the Department of Labor 
C) the Securities and Exchange Commission (SE
C)  
D) the National Association of Securities Dealers

Question 9

The desired effect of deregulation was which of the following?

Accepted Answer

A) improved quantity and quality of financial services 
B) reduction in cost of financial services 
C) greater efficiency 
D) All of the above are correct 
A) improved quantity and quality of financial services 
B) reduction in cost of financial services 
C) greater efficiency 
D) All of the above are correct

Question 10

The Investment Company Act of 1940 gave the regulatory control over mutual funds to the

Accepted Answer

A) Federal Reserve. 
B) Office of the Comptroller of the Currency. 
C) Securities and Exchange Commission (SE
C)  . 
D) U.S. Treasury. 
A) Federal Reserve. 
B) Office of the Comptroller of the Currency. 
C) Securities and Exchange Commission (SE
C)  . 
D) U.S. Treasury.

Question 11

Fully checkable deposit accounts that pay market rates of interest but require a minimum balance are called

Accepted Answer

A) super NOW accounts. 
B) money market deposit accounts. 
C) pass-through securities. 
D) securitizations. 
A) super NOW accounts. 
B) money market deposit accounts. 
C) pass-through securities. 
D) securitizations.

Question 12

Margin requirements for the purchase of stocks and bonds are set by which of the following?

Accepted Answer

A) the Securities and Exchange Commission 
B) the Fed 
C) the Options Clearing Corporation 
D) the Office of the Comptroller of the Currency 
A) the Securities and Exchange Commission 
B) the Fed 
C) the Options Clearing Corporation 
D) the Office of the Comptroller of the Currency

Question 13

During the early 1980s banks and most other intermediaries were __________ deregulated.

Accepted Answer

A) slightly 
B) not 
C) substantially 
D) None of the above 
A) slightly 
B) not 
C) substantially 
D) None of the above

Question 14

According to the text, some of the actions that regulators have proposed to mitigate the financial crisis of 2007-2008 include:

Accepted Answer

A) injecting capital into troubled banks on an as needed basis. 
B) nationalize the banking system. 
C) create a super "bad" bank that would be owned by the government and purchase the "toxic" assets clogging the financial system. 
D) All of the above are correct. 
A) injecting capital into troubled banks on an as needed basis. 
B) nationalize the banking system. 
C) create a super "bad" bank that would be owned by the government and purchase the "toxic" assets clogging the financial system. 
D) All of the above are correct.

Question 15

The Federal Deposit Insurance Corporation Improvement Act of 1991 required bank regulators to use the ____________________ in resolving a bank insolvency.

Accepted Answer

A) payoff method 
B) purchase and assumption method 
C) least costly method 
D) too big-to fail-doctrine 
A) payoff method 
B) purchase and assumption method 
C) least costly method 
D) too big-to fail-doctrine

Question 16

Which act virtually eliminated the geographic restrictions of banks and effectively repealed the McFadden Act of 1927?

Accepted Answer

A) The Basel Accord of 1988 
B) The Financial Institutions Reform, Recovery, and Enforcement Act (FIRRE
A)  of 1989 
C) The Federal Deposit Insurance Corporation Improvement Act (FDICI
A)  of 1991 
D) The Interstate Banking and Branching Efficiency Act (IBBE
A)  of 1994 
A) The Basel Accord of 1988 
B) The Financial Institutions Reform, Recovery, and Enforcement Act (FIRRE
A)  of 1989 
C) The Federal Deposit Insurance Corporation Improvement Act (FDICI
A)  of 1991 
D) The Interstate Banking and Branching Efficiency Act (IBBE
A)  of 1994

Question 17

The __________, passed in 1991, enacted regulatory changes intended to insure the safety and soundness of banks and thrifts.

Accepted Answer

A) Community Reinvestment Act 
B) Financial Institutions Reform, Recovery, and Enforcement Act (FIRRE
A)  
C) Federal Deposit Insurance Corporation Improvement Act (FDICI
A)  
D) Interstate Banking and Branching Efficiency Act (IBBE
A)  
A) Community Reinvestment Act 
B) Financial Institutions Reform, Recovery, and Enforcement Act (FIRRE
A)  
C) Federal Deposit Insurance Corporation Improvement Act (FDICI
A)  
D) Interstate Banking and Branching Efficiency Act (IBBE
A)

Question 18

Which of the following statements regarding the Interstate Banking and Branching Act (IBBEA) of 1994 is false?

Accepted Answer

A) It eliminates virtually all restrictions on interstate bank mergers. 
B) It makes interstate branching possible. 
C) It effectively repealed the McFadden Act of 1927. 
D) It allows banks to use a branch to generate deposits without considering the implications of the Community Reinvestment Act. 
A) It eliminates virtually all restrictions on interstate bank mergers. 
B) It makes interstate branching possible. 
C) It effectively repealed the McFadden Act of 1927. 
D) It allows banks to use a branch to generate deposits without considering the implications of the Community Reinvestment Act.

Question 19

The Office of Thrift Supervision (OTS) was created to

Accepted Answer

A) regulate credit unions. 
B) dispose of the properties of the failed S&Ls. 
C) oversee the S&L industry. 
D) regulate the investments of the S&Ls. 
A) regulate credit unions. 
B) dispose of the properties of the failed S&Ls. 
C) oversee the S&L industry. 
D) regulate the investments of the S&Ls.

Question 20

Which of the following are not considered regulated institutional groups?

Accepted Answer

A) banks 
B) insurance companies 
C) bonds 
D) S&Ls 
A) banks 
B) insurance companies 
C) bonds 
D) S&Ls

Exam 12: Regulation of the Banking System and the Financial Services Industry

Which of the following statements best describes the unintended consequences of usury ceilings?

Which of the following was not a provision of the Financial Institutions Reform, Recovery, and Enforcement Act?

Which of the following did not contribute to the passage of Depository Institutions Deregulation and Monetary Control Act (DIDMCA) in 1980?

The Federal Trade Commission

The Garn-St. Germain Depository Institutions Act was passed in order to

Which act imposed uniform capital standards among twelve countries?

The ________________________ insures the portfolio of retail customers of brokerage firms for up to $500,000 if the brokerage firm becomes insolvent.

The government agency that oversees securities markets, including brokers and dealers, is which of the following?

The desired effect of deregulation was which of the following?

The Investment Company Act of 1940 gave the regulatory control over mutual funds to the

Fully checkable deposit accounts that pay market rates of interest but require a minimum balance are called

Margin requirements for the purchase of stocks and bonds are set by which of the following?

During the early 1980s banks and most other intermediaries were __________ deregulated.

According to the text, some of the actions that regulators have proposed to mitigate the financial crisis of 2007-2008 include:

The Federal Deposit Insurance Corporation Improvement Act of 1991 required bank regulators to use the ____________________ in resolving a bank insolvency.

Which act virtually eliminated the geographic restrictions of banks and effectively repealed the McFadden Act of 1927?

The __________, passed in 1991, enacted regulatory changes intended to insure the safety and soundness of banks and thrifts.

Which of the following statements regarding the Interstate Banking and Branching Act (IBBEA) of 1994 is false?

The Office of Thrift Supervision (OTS) was created to

Which of the following are not considered regulated institutional groups?

Introduction and Overview

Money and Its Role in the Economy

The Overseer: the Federal Reserve System

Financial Markets, Instruments, and Market Makers

Interest Rates and Bond Prices

The Structure of Interest Rates

Market Efficiency and the Flow of Funds Among Sectors

An Introduction to Financial Intermediaries and Risk

Commercial Banking Structure, Regulation, and Performance

Financial Innovation

Financial Instability and Strains on the Financial System

The Debt Markets

The Stock Market

Securities Firms, Mutual Funds, and Financial Conglomerates

How Exchange Rates Are Determined

Forward, Futures, and Options Agreements

The International Financial System

The Fed, Depository Institutions, and the Money Supply Process

The Demand for Real Money Balances and Market Equilibrium

Financial Aspects of the Household, Business, Government, and Rest-Of-The-World Sectors

Aggregate Demand and Aggregate Supply

The Challenges of Monetary Policy

The Process of Monetary Policy Formation

Policy Implementation

Monetary Policy in a Globalized Financial System

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