Deck 7: Making Money: Why Has Finance

Question 1

A common perception of today's hypermobile finance is that it is:

A) Deterritorialized
B) Placeless
C) Unbound
D) All of the above
E) None of the above

Answer 1

All of the above

Question 2

Money has become largely ______________, replacing tangible forms such as coins, notes, checks, and credit notes.

A) Electronic
B) Available
C) Localized
D) All of the above
E) None of the above

Answer 2

Electronic

Question 3

By 2011, more than ______ of all the money in the economy of the United Kingdom was not in the form of notes and coin.

A) 97%
B) 75%
C) 49%
D) 10%
E) 1%

Answer 3

97%

Question 4

Overlapping financial markets in different time zones allow financial firms to engage in _________________ trading.

A) Protracted and cautious
B) 24-hour-a-day
C) Limited
D) All of the above
E) None of the above

Question 5

An economic-geographic reading of the overall geography of the global financial industry argues that it is __________________ to change.

A) Resistant
B) Not in a position
C) Never subject
D) All of the above
E) None of the above

Question 6

The "home bias" effect in global finance refers to the fact that:

A) The vast majority of banking customers continue to prefer banking with smaller, local credit unions
B) The vast majority of banking institutions opt to establish headquarters outside their home jurisdictions
C) The vast majority of financial assets today remain confined to investments in, and institutions of, their home jurisdictions
D) All of the above
E) None of the above

Question 7

London, New York, and Hong Kong account for approximately how much of global equity trading?

A) 100%
B) 99%
C) 70%
D) 40%
E) 1%

Question 8

Which of the following cities control a large share of the international financial transactions in the global economy?

A) New York
B) Zurich
C) San Francisco
D) All of the above
E) None of the above

Question 9

The fact that accessibility to finance is becoming more global, and yet financial centers in specific places are ___________________ their dominance, represents a paradox.

A) Consolidating
B) Apologizing for
C) Decentralizing
D) All of the above
E) None of the above

Question 10

The modern banking system acts as a financial intermediary between savers and:

A) Banking customers
B) Bankers
C) Investors
D) All of the above
E) None of the above

Question 11

Savers in the banking system act as:

A) Creditors
B) Investors
C) Primary earners
D) All of the above
E) None of the above

Question 12

In general, banks pool together our money/savings as capital and use that capital to finance productive activity such as:

A) Commodity production
B) The manufacturing of goods
C) The provision of services
D) All of the above
E) None of the above

Question 13

In theory, the banking system is about the pooling of financial resources among those with ____________________ to be lent out to those in need of such funds for investment in productive activity.

A) Borrowed funds
B) Surplus funds
C) Bad credit
D) All of the above
E) None of the above

Question 14

Banks lend a lot more than they have in deposits, and this is called a:

A) Intermediate ratio
B) Financial midpoint
C) Reserve ratio
D) All of the above
E) None of the above

Question 15

In general, the interest payable by the borrower is ____________________ the interest received by the creditor.

A) Significantly higher than
B) Slightly lower than
C) Equivalent to
D) All of the above
E) None of the above

Question 16

______________ retain the difference in saving-lending interest rates as compensation for their service in rendering financial intermediation.

A) Banks
B) Investors
C) Nation-states
D) All of the above
E) None of the above

Question 17

From a geographical standpoint, depositors, banks, and borrowers ________________ in the same area/region for such exchange to take place.

A) Must always be
B) Can never be
C) Need not be
D) All of the above
E) None of the above

Question 18

Consumer finance extends credit to:

A) Individuals
B) Corporations
C) Entrepreneurs
D) All of the above
E) None of the above

Question 19

Credit extended through consumer finance is intended for the acquisition of:

A) Corporate infrastructure
B) Assets such as mortgages or services such as college loans
C) Building factories or nonspeculative property development
D) All of the above
E) None of the above

Question 20

The banking system will allocate financing to those economic endeavors with the:

A) Best chances of success and the least risk
B) Most efficient uses of financial capital
C) Highest rate of return
D) All of the above
E) None of the above

Question 21

In a capitalist system, money serves primarily as a:

A) Means of payment
B) A unit of account
C) A store of value
D) All of the above
E) None of the above

Question 22

The vast majority of monetary payments do not take place with _________________ but, rather, via the financial system.

A) Electronic transfers
B) Physical notes and coins
C) Credit cards
D) All of the above
E) None of the above

Question 23

Historically, the U.K. banking system became increasingly concentrated and centralized in the hands of national banks headquartered in London as a result of:

A) The arrival of shareholder banking
B) The growth of the British Empire
C) Waves of mergers and acquisitions
D) All of the above
E) None of the above

Question 24

The development of regulation by each individual state in the first half of the 20th century prompted a trend in the United States toward:

A) Consolidated and centralized approaches to banking
B) Regionally-based banking systems
C) The expansion of bank branches and subsidiaries across state borders
D) All of the above
E) None of the above

Question 25

A local or regional banking system is generally:

A) Less likely to serve the local economy and business community
B) Less able to retain locally originated capital
C) More vulnerable to an external financial crisis
D) All of the above
E) None of the above

Question 26

A nationally-oriented banking system is often:

A) Less forgiving when it comes to serving some local communities
B) More cautious and restrictive with lending practices in less prosperous local economies
C) More likely to cross-subsidize operations in poorer areas during upswings in business cycles
D) All of the above
E) None of the above

Question 27

A massive consolidation of banks has occurred on the back of the post-Fordist global economy in which _______________ sectors have come to the forefront of generating economic value and wealth.

A) Service
B) Manufacturing
C) Highly-regulated
D) All of the above
E) None of the above

Question 28

The consolidation of bank branches is often very spatially selective, leading to the exclusion of:

A) Low-income inner-city areas
B) Rural communities
C) Ethnically segregated neighborhoods
D) All of the above
E) None of the above

Question 29

The process whereby financial institutions increasingly keep their financial resources within the financial system rather than financing investment in production and related economic activity:

A) "Churning"
B) "Equivocating"
C) "Financial recycling"
D) All of the above
E) None of the above

Question 30

"Securitization" in the banking sector refers to:

A) Engaging in direct lending to borrowers and avoiding the issuance of securities
B) Issuing securities with underlying asset values rather than just engaging in direct lending to borrowers
C) The centralization of banking operations
D) All of the above
E) None of the above

Question 31

Non-bank institutions such as securities and commodities trading firms, fund management companies, and hedge fund firms pool vast sums of financial capital in the form of:

A) Pension funds
B) Life insurance
C) Mutual funds
D) All of the above
E) None of the above

Question 32

The state in both the United States and the United Kingdom has experienced an ideological shift from a welfare regime to a ________________ market regime.

A) Free
B) Neoliberal
C) Conservative
D) All of the above
E) None of the above

Question 33

Thatcherism during the 1980s led to the massive privatization of which public goods in the United Kingdom?

A) Transport
B) Communications
C) Utilities
D) All of the above
E) None of the above

Question 34

Financial centers should not be considered on their own and purely in terms of the local relationships they contain, but as ___________ in global networks.

A) Nodes
B) Fringes
C) Subordinate
D) All of the above
E) None of the above

Question 35

This movement started in Manhattan's Liberty Square in 2011 as a bottom-up response to counter the excessive power and greed of Wall Street banks and firms in the new millennium.

A) "Grassroots Banking"
B) "Liberty For All"
C) "Occupy Wall Street"
D) All of the above
E) None of the above

Question 36

In this pervasive process, all sorts of assets and things are transformed into financial instruments for trading among individuals and firms in the international capital markets.

A) Predatory lending
B) Financialization
C) Securitization
D) All of the above
E) None of the above

Question 37

These are financial instruments negotiable between the seller and the buyer whose value is determined by the market mechanism. They include equities (e.g., stocks and shares) and debts (e.g., bonds) issued by firms and state agencies.

A) Securities
B) Pensions
C) Debts
D) All of the above
E) None of the above

Question 38

Exactly how do banks leverage the difference between saving-lending interest rates as compensation for their services-i.e., how do banks "make money"?

Question 39

Discuss three factors that a banking system takes into consideration when allocating financing to an economic endeavor.

Question 40

What does the "securitization" of the banking sector entail? How might these changes someday impact you as a banking customer?