Question 1

The actual purchase or sale of investments in the open market is performed by the:

Accepted Answer

A)  Federal Savings and Loan Insurance Corporation.
B)  Federal Deposit Insurance Corporation.
C)  National Credit Union Administration.
D)  Federal Reserve Board.
E)  New York Federal Reserve Bank.F) A) and D)
G) B) and C)

Question 2

Money is a medium of exchange.

Accepted Answer

A) True 
 B)False

Question 3

For money to serve effectively as a measure of value,all items must be valued in terms of comparable units.Which of the following characteristics of money does this statement reflect?

Accepted Answer

A)  Divisibility
B)  Durability
C)  Acceptability
D)  Stability
E)  PortabilityF) A) and C)
G) A) and D)

Question 4

_____ are businesses that offer short-term loans at substantially higher rates of interest than banks.

Accepted Answer

A)  Brokerage firms
B)  Investment firms
C)  Finance companies
D)  Mutual fund providers
E)  Insurance companiesF) A) and E)
G) C) and E)

Question 5

Credit cards:

Accepted Answer

A)  work like checks.
B)  allow cardholders to pay for transactions at a later date.
C)  offer no purchase "grace period."
D)  do not charge any interest on a cardholder's unpaid balance.
E)  are the same as debit cards.F) B) and E)
G) C) and D)

Question 6

Which of the following acts restricted commercial banks from engaging in certain high-risk trading activities and also raised the required capital that banks must hold on their balance sheets?

Accepted Answer

A)  The Federal Deposit Insurance Act
B)  The Financial Services Modernization Act
C)  The Gramm-Leach-Bliley Act
D)  The Glass-Steagall Act
E)  The Dodd-Frank ActF) B) and D)
G) C) and E)

Question 7

As a medium of exchange,money:

Accepted Answer

A)  makes it harder to trade.
B)  creates a complicated service structure.
C)  reduces the need for bartering.
D)  is indivisible.
E)  can easily be counterfeited.F) A) and E)
G) B) and D)

Question 8

Which of the following is the largest pension fund?

Accepted Answer

A)  Individual retirement account
B)  Corporate insurance plan
C)  Social Security
D)  Roth individual retirement accountE) A) and C)
F) None of the above

Question 9

When the Federal Reserve Board increases the reserve requirements,the:

Accepted Answer

A)  money supply declines.
B)  amount of money in circulation increases.
C)  amount of insurance for accounts increases.
D)  checks in the system are declared invalid.
E)  percentage of deposits that banks must hold in reserve declines.F) A) and B)
G) All of the above

Question 10

A credit union is owned and controlled by the government.

Accepted Answer

A) True 
 B)False

Question 11

What is an outcome of the Federal Reserve Board decreasing the reserve requirements?

Accepted Answer

A)  Interest rates increase; the money supply decreases; economic activity increases.
B)  Banks make fewer loans; the money supply declines; economic activity slows down.
C)  Banks make more loans; the money supply increases; economic activity increases.
D)  Interest rates increase; the money supply decreases; economic activity slows down.
E)  The money supply decreases; economic activity slows down.F) D) and E)
G) A) and B)

Question 12

Finance companies buy and sell stocks and bonds for their customers.

Accepted Answer

A) True 
 B)False

Question 13

_____ are preferred over currency for many transactions due to their lower risk of loss.

Accepted Answer

A)  Bitcoins
B)  Coins
C)  Checks
D)  Gold bars
E)  Real assetsF) A) and B)
G) B) and E)

Question 14

A money market fund differs from a bank money market account in that the former:

Accepted Answer

A)  offers slightly higher rates of interest than a bank money market account.
B)  represents a specialized,individual checking account.
C)  does not invest in government bonds,only securities issued by private companies.
D)  does not offer services such as check-writing privileges and reinvestment of interest income.
E)  invests exclusively in long-term debt securities issued by large corporations.F) C) and D)
G) None of the above

Question 15

A check:

Accepted Answer

A)  has a higher risk of loss than currency for transactions.
B)  has a time limit of 30 days.
C)  cannot be canceled by means of a stop payment once it is signed.
D)  is not a substitute for currency and coins.
E)  can be rendered worthless in case of suspected forgery.F) None of the above
G) A) and B)

Question 16

Which of the following actions did the Federal Reserve take during the financial crisis of 2007-2008?

Accepted Answer

A)  It gave a directive to change the management of the banks that had to be bailed out.
B)  It bought troubled assets from banks and lent money at the discount window to nonbanks.
C)  It compensated all investors who lost money in the crisis.
D)  It kept the discount rates high to discourage borrowing.
E)  It issued a directive to keep all information regarding derivative products confidential.F) A) and B)
G) C) and D)

Question 17

There is an increase in economic activity when the Federal Reserve Board:

Accepted Answer

A)  sells government securities.
B)  raises the discount rate.
C)  increases reserve requirements.
D)  relaxes credit controls.E) B) and C)
F) A) and C)

Question 18

Why is the life span of a $1 note likely to be lesser than that of a $100 note?

Accepted Answer

A)  A $100 note rates higher on divisibility.
B)  A $100 note rates lower on portability.
C)  A $100 note is more stable.
D)  A $100 note is less frequently passed between users.
E)  A $100 note can easily be imitated.F) D) and E)
G) A) and D)

Question 19

A checking account at a credit union is commonly referred to as a(n) _____.

Accepted Answer

A)  share draft account
B)  savings account
C)  share account
D)  negotiable order of withdrawal account
E)  individual retirement accountF) A) and D)
G) A) and E)

Question 20

A savings account at a credit union is commonly referred to as a(n) _____.

Accepted Answer

A)  current account
B)  checking account
C)  share account
D)  negotiable order of withdrawal account
E)  individual retirement accountF) B) and C)
G) D) and E)

Exam 15: Money and the Financial System

A money market fund differs from a bank money market account in that the former:

Correct AnswerverifiedShow Answer

Which of the following acts restricted commercial banks from engaging in certain high-risk trading activities and also raised the required capital that banks must hold on their balance sheets?

Correct AnswerverifiedShow Answer

Why is the life span of a $1 note likely to be lesser than that of a $100 note?

Correct AnswerverifiedShow Answer

The actual purchase or sale of investments in the open market is performed by the:

Correct AnswerverifiedShow Answer

What is an outcome of the Federal Reserve Board decreasing the reserve requirements?

Correct AnswerverifiedShow Answer

Money is a medium of exchange.

Correct AnswerverifiedShow Answer

Which of the following is the largest pension fund?

Correct AnswerverifiedShow Answer

Credit cards:

Correct AnswerverifiedShow Answer

A check:

Correct AnswerverifiedShow Answer

Which of the following actions did the Federal Reserve take during the financial crisis of 2007-2008?

Correct AnswerverifiedShow Answer

A credit union is owned and controlled by the government.

Correct AnswerverifiedShow Answer

_____ are businesses that offer short-term loans at substantially higher rates of interest than banks.

Correct AnswerverifiedShow Answer

A savings account at a credit union is commonly referred to as a(n) _____.

Correct AnswerverifiedShow Answer

There is an increase in economic activity when the Federal Reserve Board:

Correct AnswerverifiedShow Answer

_____ are preferred over currency for many transactions due to their lower risk of loss.

Correct AnswerverifiedShow Answer

When the Federal Reserve Board increases the reserve requirements,the:

Correct AnswerverifiedShow Answer

As a medium of exchange,money:

Correct AnswerverifiedShow Answer

A checking account at a credit union is commonly referred to as a(n) _____.

Correct AnswerverifiedShow Answer

Finance companies buy and sell stocks and bonds for their customers.

Correct AnswerverifiedShow Answer

For money to serve effectively as a measure of value,all items must be valued in terms of comparable units.Which of the following characteristics of money does this statement reflect?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified