Deck 15: Money and Banking

Question 1

Float refers to the amount of money owed to the Federal Reserve by member banks.

Answer 1

False

Question 2

Commercial banks have increased their share of the financial services market relative to their competitors in the United States.

Answer 2

False

Question 3

The Interstate Banking Efficiency Act prohibits banks from initiating or expanding interstate banking operations.

Answer 3

False

Question 4

Phone callers and shoppers in Europe and Asia are the most avid users of the smart card.

Question 5

M-2 is now a better predictor of the nation's health than M-1.

Question 6

M-3 contains more liquid deposits than M-2.

Question 7

There are over 150,000 federally insured commercial banks in the United States.

Question 8

Financial institutions that are not members of the Federal Reserve System are not covered by the FDIC.

Question 9

Float refers to the time it takes for a check to clear.

Question 10

Which measure of the money supply is regarded as the best predictor of the nation's economic health as measured by the gross domestic product?

A) M-1
B) M-2
C) M-3
D) M-4

Question 11

Credit cards are included in _____ when measuring the nation's money supply.

A) M-1
B) M-2
C) M-3
D) none of these

Question 12

About how many ATMs are located in U.S. bank buildings and other locations?

A) 20,000
B) 100,000
C) 350,000
D) 1 million

Question 13

The FDIC guarantees, through its Bank Insurance Fund (BIF), the safety of all deposits up to the current maximum (per deposit) of _____.

A) $10,000
B) $50,000
C) $100,000
D) $250,000

Question 14

_____ is the total amount of checks in the check-clearing process at any one time.

A) Total check capacity
B) Capability of the check
C) Float
D) Conglomerate draft analysis

Question 15

The Fed can exert influence over business activity by exercising _____. For example, the Fed may set requirements for consumer stock purchases as well as credit rules for other consumer purchases.

A) discount rates
B) margin requirements
C) open-market operations
D) selective credit controls

Question 16

Before the ____, banks could not operate branches across state lines.

A) Interstate Banking Efficiency Act
B) Bank Revitalization and Deregulation Act
C) Banking Deregulation Act
D) Branch Banking Act

Question 17

A key provision of the Interstate Bank Efficiency Act is _____.

A) allowing limited nationwide banking
B) limiting the ultimate size of banks
C) allowing banks to provide transactions for affiliated banks in other states
D) all of these are provisions of the Act

Question 18

_____ is the most reliable measure of money and is used by economists for economic planning.

A) Currency
B) M-1
C) M-2
D) A demand deposit

Question 19

A major portion of a bank's income comes from _____.

A) stock investments
B) interest paid on loans by borrowers
C) foreign investors
D) changes in the reserve requirement

Question 20

Larry sent a check to Louise for $50. Larry banks at the Bank of Malden, which has an account at the Federal Reserve Bank of Boston. Louise banks at Farmers State Bank, which has an account at the Federal Reserve Bank of Chicago. Where does the check go after it arrives at the Federal Reserve Bank of Chicago?

A) to the Bank of Malden
B) to the Farmers State Bank
C) to the Federal Reserve Bank of Boston
D) to the Fed in Washington, D.C.

Question 21

Which of the following is NOT a key provision of the Interstate Banking Efficiency Act?

A) The ultimate size of any bank is limited.
B) Affiliated banks can become interstate branches.
C) Banks must establish out-of-state branches to primarily gain deposits.
D) Banks cannot establish out-of-state branches primarily to gain deposits.

Question 22

No bank can control more than _____of a state's deposits.

A) 10 percent
B) 30 percent
C) 50 percent
D) There is no limit that a bank can control.

Question 23

What does the M-3 money supply contain?

Question 24

What are some of the negative aspects of e-cash at the current time?

Question 25

Explain how financial institutions create money, and describe the means by which financial institutions are regulated.

Question 26

How is money "treated" differently in Japan than in the United States?

Question 27

How is money viewed as part of national identity?

Question 28

Attitudes about money in the United States are "relaxed." Explain.

Question 29

This scenario suggests one critical feature of money that may be even more important than the national identities that it creates. What is it?

Question 30

Pete Kight recognizes that EFT payments are much cheaper than traditional check payments. According to the text, what is the cost difference between the two methods?

Question 31

How do customers benefit from using the services of CheckFree?

Question 32

What is likely to be one of the main reasons consumers do not wish to use services like those offered by CheckFree?

Question 33

Pete Kight continues to make the checkbook obsolete with the services offered by CheckFree. What encourages Kight to continue in his efforts?