Question 1

Which of the following actions can the Federal Deposit Insurance Company take in the event of a failure of one of its insured banks?

Accepted Answer

A)   The FDIC can seize the assets of the bank and its investors and settle the bank's debts.
B)   The FDIC can allow the bank to stay afloat by granting a loan of federal money.
C)   The FDIC can conduct an inquiry into the investors' assets and actions to determine if there was any malfeasance that caused the bank failure.
D)   The FDIC can allow another bank to take responsibility for the failed bank's liabilities through sale of the failed bank.
E)   The FDIC can settle the bank's debts through its insurance deposit fund and regulate the bank's transactions more strictly.F) A) and B)
G) All of the above

Question 2

If a U.S. firm wishes to buy products from an overseas supplier, what would the firm use to guarantee payment on a certain date?

Accepted Answer

A)   Currency exchange guarantee
B)   Letter of credit
C)   Brokerage service
D)   Banker's acceptance
E)   Security intermediaryF) A) and E)
G) C) and D)

Question 3

Which of the following transactions are NOT included among Automated Clearing House payments?

Accepted Answer

A)   ATM deposits
B)   Business-to-business electronic payments
C)   Checks
D)   Internet-initiated debit card payments
E)   Local tax paymentsF) C) and E)
G) A) and E)

Question 4

Why does a government lower interest rates to affect the value of the currency?

Accepted Answer

A)   To strengthen the value of the currency in the world market
B)   To make goods cheaper and more attractive in the world market
C)   To stimulate inflation
D)   To increase the number of foreign imports, thereby increasing trade
E)   To offset the price of must-have commodities, such as oilF) A) and B)
G) C) and D)

Question 5

Which of the following statements BEST describes how the Automated Clearing House Network (ACH) maintains its integrity as a processor of electronic payments?

Accepted Answer

A)   The ACH network is an institution within the Federal Bank System and is regulated by strict government standards.
B)   The ACH network is a for-profit company and is regulated by its need to make a profit, which it can only do by strictly regulating itself.
C)   The ACH network is a financial institution and is thus regulated by its obligations to its investors.
D)   The ACH network is a not-for-profit association and is regulated by its independence from outside interests.
E)   The ACH network is a professional organization to which all financial institutions are obligated to contribute resources and is regulated by the interests of these institutions.F) A) and B)
G) A) and C)

Question 6

What are the components of the M-1 money supply?

Accepted Answer

The M-1 money supply is made up of curre...

Question 7

The Federal Reserve Bank has the responsibility of ensuring the reasonableness of the interest rates for business and personal loans within the United States.

Accepted Answer

A) True 
 B)False

Question 8

When a bank's assets are sold to settle debt during a bank failure, what happens to the resulting gain?

Accepted Answer

A)   Remaining funds are added to the insurance deposit funds.
B)   Remaining funds are deducted to those paid by the insurance deposit funds.
C)   Remaining funds are used to buy and consolidate smaller banks.
D)   Remaining funds are dispersed to depositors to help offset losses.
E)   Remaining funds are returned to the bank to aid in recovery.F) C) and D)
G) None of the above

Question 9

An overly large decrease in the reserve requirement by the Federal Reserve System could result in inflation.

Accepted Answer

A) True 
 B)False

Question 10

Why do exchange rates matter to companies?

Accepted Answer

A)   Strong exchange rates could stimulate sales in foreign markets.
B)   Inflation could be caused by an exchange rate that is too strong.
C)   Poor exchange rates can be offset by government contribution.
D)   Exchange rates indicate the strength of the overall economy.
E)   Exchange rates affect the prices of goods and services.F) B) and D)
G) A) and B)

Exam 16: Understanding Money and the Role of Banking

Why do exchange rates matter to companies?

Correct Answer
verified

Which of the following actions can the Federal Deposit Insurance Company take in the event of a failure of one of its insured banks?

Correct Answer
verified

Which of the following statements BEST describes how the Automated Clearing House Network (ACH) maintains its integrity as a processor of electronic payments?

Correct Answer
verified

An overly large decrease in the reserve requirement by the Federal Reserve System could result in inflation.

Correct Answer
verified

Which of the following transactions are NOT included among Automated Clearing House payments?

Correct Answer
verified

When a bank's assets are sold to settle debt during a bank failure, what happens to the resulting gain?

Correct Answer
verified

Why does a government lower interest rates to affect the value of the currency?

Correct Answer
verified

The Federal Reserve Bank has the responsibility of ensuring the reasonableness of the interest rates for business and personal loans within the United States.

Correct Answer
verified

If a U.S. firm wishes to buy products from an overseas supplier, what would the firm use to guarantee payment on a certain date?

Correct Answer
verified

What are the components of the M-1 money supply?

Correct Answer
verified
The M-1 money supply is made up of curre...
View Answer

Exam 16: Understanding Money and the Role of Banking

Why do exchange rates matter to companies?

Correct AnswerverifiedShow Answer

Which of the following actions can the Federal Deposit Insurance Company take in the event of a failure of one of its insured banks?

Correct AnswerverifiedShow Answer

Which of the following statements BEST describes how the Automated Clearing House Network (ACH) maintains its integrity as a processor of electronic payments?

Correct AnswerverifiedShow Answer

An overly large decrease in the reserve requirement by the Federal Reserve System could result in inflation.

Correct AnswerverifiedShow Answer

Which of the following transactions are NOT included among Automated Clearing House payments?

Correct AnswerverifiedShow Answer

When a bank's assets are sold to settle debt during a bank failure, what happens to the resulting gain?

Correct AnswerverifiedShow Answer

Why does a government lower interest rates to affect the value of the currency?

Correct AnswerverifiedShow Answer

The Federal Reserve Bank has the responsibility of ensuring the reasonableness of the interest rates for business and personal loans within the United States.

Correct AnswerverifiedShow Answer

If a U.S. firm wishes to buy products from an overseas supplier, what would the firm use to guarantee payment on a certain date?

Correct AnswerverifiedShow Answer

What are the components of the M-1 money supply?

Correct AnswerverifiedThe M-1 money supply is made up of curre...View AnswerShow 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
The M-1 money supply is made up of curre...
View Answer