Question 1

Which of these pairs of financial institutions are most alike in terms of their main lines of business?

Accepted Answer

A)   Commercial banks and thrifts.
B)   Insurance companies and mutual fund companies.
C)   Thrifts and securities firms.
D)   Pension fund companies and commercial banks.E) None of the above
F) A) and C)

Question 2

Commercial banks and thrift institutions:

Accepted Answer

A)   differ because thrifts cannot make loans.
B)   differ because thrifts cannot offer checkable deposits.
C)   have become less similar in recent years.
D)   have become increasingly similar in recent years.E) None of the above
F) A) and D)

Question 3

A $20 bill is a:

Accepted Answer

A)   gold certificate.
B)   Treasury note.
C)   Treasury bill.
D)   Federal Reserve Note.E) C) and D)
F) B) and D)

Question 4

The value of money varies:

Accepted Answer

A)   inversely with the price level.
B)   directly with the volume of employment.
C)   directly with the price level.
D)   directly with the interest rate.E) C) and D)
F) None of the above

Question 5

Suppose that the federal government suddenly declared that wheat was to be used as money.What is a possible outcome of that decision?

Accepted Answer

A)   The value of the "wheat dollar" would be unstable depending on crop yields from year to year.
B)   Farmers would replace corn and soy crops with wheat.
C)   Wheat would function as money so long as people accept it in exchange for goods and services.
D)   All of these are possible outcomes.E) A) and B)
F) None of the above

Question 6

If you write a check on a bank to purchase a used Honda Civic,you are using money primarily as:

Accepted Answer

A)   a medium of exchange.
B)   a store of value.
C)   a unit of account.
D)   an economic investment.E) B) and C)
F) A) and D) A

Question 7

The 12 Federal Reserve Banks are governmentally owned but privately controlled.

Accepted Answer

A) True 
 B)False

Question 8

"Subprime mortgage loans" refer to:

Accepted Answer

A)   high-interest-rate loans to home buyers with above-average credit risk.
B)   home-buying loans that charge interest rates below the prime interest rate.
C)   loans to buyers of homes that are in need of substantial repair.
D)   loans from the Federal Reserve to home mortgage lenders to support a greater volume of home-buying loans at affordable interest rates.E) None of the above
F) B) and C)

Question 9

The central authority of the U.S.banking system is the:

Accepted Answer

A)   Federal Open Market Committee (FOM
C)  .
B)   Board of Governors of the Federal Reserve.
C)   Federal Monetary Authority.
D)   Council of Economic Advisers.E) A) and C)
F) All of the above

Question 10

To say that the Federal Reserve Banks are quasi-public banks means that:

Accepted Answer

A)   they are privately owned but managed in the public interest.
B)   they deal only with banks of foreign nations and do not have direct business contact with U.S.banks.
C)   they deal only with commercial banks,and not the public.
D)   they are publicly owned but privately managed.E) B) and C)
F) A) and D)

Question 11

New York Life,Prudential,and Hartford are all primarily:

Accepted Answer

A)   commercial banks.
B)   mutual fund companies.
C)   insurance companies.
D)   securities firms.E) None of the above
F) All of the above

Question 12

TIAA-CREF,Teamsters' Union,and CalPERS are all primarily:

Accepted Answer

A)   commercial banks.
B)   thrifts.
C)   insurance companies.
D)   pension funds.E) A) and B)
F) A) and C)

Question 13

After years of aiding drug cartels,mobsters,and terrorist groups laundering money,HSBC bank was:

Accepted Answer

A)   fined about five weeks' worth of profits.
B)   taken over and run by the government,pending reorganization.
C)   dismantled by the government,with different sectors in the bank sold to other banks in the system.
D)   fined nearly $1 trillion,and key executives were held criminally responsible.E) C) and D)
F) All of the above

Question 14

Currency (paper money plus coins) constitutes about:

Accepted Answer

A)   24 percent of the U.S.M1 money supply.
B)   45 percent of the U.S.M1 money supply.
C)   51 percent of the U.S.M1 money supply.
D)   55 percent of the U.S.M1 money supply.E) B) and C)
F) None of the above

Question 15

Fidelity,Putnam,Janus,and Vanguard are examples of mutual fund companies.

Accepted Answer

A) True 
 B)False

Question 16

If you are estimating your total expenses for school next semester,you are using money primarily as:

Accepted Answer

A)   a medium of exchange.
B)   a store of value.
C)   a unit of account.
D)   an economic investment.E) C) and D)
F) B) and C)

Question 17

The Federal Reserve System was created in:

Accepted Answer

A)   1926.
B)   1946.
C)   1895.
D)   1913.E) B) and C)
F) C) and D)

Question 18

Coins held in commercial banks are:

Accepted Answer

A)   included in M1 but not in M2.
B)   included both in M1 and in M2.
C)   included in M2 but not in M1.
D)   not part of the nation's money supply.E) A) and B)
F) A) and C)

Question 19

Other things equal,an excessive increase in the money supply will:

Accepted Answer

A)   increase the purchasing power of each dollar.
B)   decrease the purchasing power of each dollar.
C)   have no impact on the purchasing power of the dollar.
D)   reduce the price level.E) All of the above
F) A) and D) B

Question 20

A $70 price tag on a sweater in a department store window is an example of money functioning as a:

Accepted Answer

A)   unit of account.
B)   standard of deferred payments.
C)   store of value.
D)   medium of exchange.E) B) and C)
F) A) and C) A

Exam 33: Money, Banking, and Financial Institutions

Which of these pairs of financial institutions are most alike in terms of their main lines of business?

Correct AnswerverifiedShow Answer

Commercial banks and thrift institutions:

Correct AnswerverifiedShow Answer

A $20 bill is a:

Correct AnswerverifiedShow Answer

The value of money varies:

Correct AnswerverifiedShow Answer

Suppose that the federal government suddenly declared that wheat was to be used as money.What is a possible outcome of that decision?

Correct AnswerverifiedShow Answer

If you write a check on a bank to purchase a used Honda Civic,you are using money primarily as:

Correct AnswerverifiedA

The 12 Federal Reserve Banks are governmentally owned but privately controlled.

Correct AnswerverifiedShow Answer

"Subprime mortgage loans" refer to:

Correct AnswerverifiedShow Answer

The central authority of the U.S.banking system is the:

Correct AnswerverifiedShow Answer

To say that the Federal Reserve Banks are quasi-public banks means that:

Correct AnswerverifiedShow Answer

New York Life,Prudential,and Hartford are all primarily:

Correct AnswerverifiedShow Answer

TIAA-CREF,Teamsters' Union,and CalPERS are all primarily:

Correct AnswerverifiedShow Answer

After years of aiding drug cartels,mobsters,and terrorist groups laundering money,HSBC bank was:

Correct AnswerverifiedShow Answer

Currency (paper money plus coins) constitutes about:

Correct AnswerverifiedShow Answer

Fidelity,Putnam,Janus,and Vanguard are examples of mutual fund companies.

Correct AnswerverifiedShow Answer

If you are estimating your total expenses for school next semester,you are using money primarily as:

Correct AnswerverifiedShow Answer

The Federal Reserve System was created in:

Correct AnswerverifiedShow Answer

Coins held in commercial banks are:

Correct AnswerverifiedShow Answer

Other things equal,an excessive increase in the money supply will:

Correct AnswerverifiedB

A $70 price tag on a sweater in a department store window is an example of money functioning as a:

Correct AnswerverifiedA

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A

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B

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A