Business 100- Ch.18

Federal Reserve System

"Lender of last resort" is a name given to the __________________ because it was created to assist other banks within the United States.

Acceptance

A banker's _________________ is a promise that the bank will pay some specified amount at a particular time with no conditions.

Demand deposit

A checking account is also referred to as a:

Electronic

A debit card is a(n) ______________ check that withdraws money from a checking account.

Smart card

A device that can take the place of a credit card, debit card, driver's license, and other personal information is called a(n)

Savings and loan

A financial institution that accepts checking and savings deposits and provides home mortgages is a(n) __________________ association.

A run on and closure of many banks

A major event in the Great Depression created by a weak banking system was:

The banker's bank

A nickname for Federal Reserve is:

Credit union

A non-profit, member-owned financial cooperative that offers the full variety of banking services to their members is called a:

Not part of the banking system

A payroll debit card serves as a way to pay employees who are:

Time

A savings account is called a(n) __________ deposit because the bank can require you to make prior notice before withdrawal.

Driver's license Credit card Debit card

A smart card is an electronic funds transfer tool that serves as a(n):

Certificate of deposit

A type of time deposit that earns interest which is to be delivered on a future maturity date is called a _________________.

It has a maturity date

A uniqueness of a certificate of deposit compared to a time deposit is that:

Given the consumer a greater variety of services Offered more banking services through one provider

Allowing banks and non-banks to offer similar services has:

Offered more banking services through one provider Given the consumer a greater variety of services

Allowing banks and non-banks to offer similar services has:

Stability Divisibility Portability

Among the five standards for a useful form of money are:

Barter

An accountant who installs financial software for a beauty shop to earn "trade credits," which the accountant uses to have painters paint her house is an example of a(n) ______________ exchange.

Checks

An example of the M-1 (money supply) could be:

A debit card

Another name for an electronic check is:

Federal income

As nonprofit institutions, credit unions enjoy an exemption from ______________ taxes.

Always been a concern of banks

Balancing the needs of borrowers and depositors has:

Global in nature

Banking has to be seen today as:

Increased

Banks and non-banks have become so similar that the competition between them has:

Repay

Banks that contributed to the real estate collapse often did not look at a customer's ability to _________ loans.

Make sure depositors did not lose money in a bank failure

Deposit insurance was created to:

More

Due to problems in the 1980s, rules were changed to make S&L's ___________ like commercial banks.

Money

Economic growth and the creation of jobs depend on the ready availability of ______________.

Something that allows you to make online payments One of the newest forms of money Something that allows for direct deposits

Electronic cash (e-cash) can be described as:

They administer and supervise the twelve Federal Reserve banks The primary function is to set monetary policy The seven members are appointed by the President and confirmed by the Senate

Facts about the Federal Reserve Board of Governors include the fact that:

Non-banks

Financial organizations that accept no deposits but offer many of the same services as regular banks are called:

For countries in financial difficulty

IMF is not primarily a lending source, but they do make funds available:

Inflation

If the Federal Reserve suddenly vastly increased the amount of money in circulation, it could lead to:

Sell

If the Federal Reserve wants to slow the economy, it will _____________ government bonds.

Reimburse the account holders Transfer the accounts to a new bank

In case of bank failure, the FDIC will:

Letter of credit

In international banking, a(n) _____________________ is a promise by a bank to pay the seller a given amount if certain conditions are met.

The money supply

In the United States the Federal Reserve is in charge of:

Easier to perform

International banking practices such as letters of credit and banker's acceptance make international banking:

A proper money supply policy

It is possible to grow the economy without causing inflation with the help of:

Buying and selling government securities Setting reserve requirements Collecting data on money policy

Jobs of the Federal Reserve

International

Letters of Credit, Banker's Acceptance, and Currency Exchange are major services that banks provide to _____________________ businesses.

Banker's acceptance Letters of credit Currency exchange

Major services that banks provide to international business include:

There must be an easily understood and readily available way to have non-barter transactions

Money (currency) is important to a working economy because:

Life insurance companies Brokerage firms Pension funds

Non-bank entities that influence the financial economy as much as banks do include:

Life insurance companies Pension funds Brokerage firms

Non-bank entities that influence the financial economy as much as banks do include:

Mortgage-backed securities

One of the reasons for the banking crisis was that banks made questionable loans and resold them as:

Questionable

One of the reasons for the banking crisis was that banks were pressured by Congress and other groups to make _____________ loans.

Did not do their job

One of the reasons for the banking crisis was that federal bank regulatory and rating agencies ______________.

That they could not repay

One of the reasons for the banking crisis was that people borrowed money:

Credit cards

One technological solution to reduce paper was introducing:

Government bonds

Open-market operations consist of the buying and selling of:

Commercial credit companies Brokerage firms

Organizations that are becoming more involved in lending include:

Record transactions and locations

RFID (radio frequency identification) cards:

With international trade, a major event is felt by all Money is free to flow around the world and is not limited to one country

Reasons the U.S. money and economy are closely linked to the rest of the world include:

Human rights concerns Environmental concerns

Reasons the World Bank has been the subject of criticisms include:

Direct

Recall that a(n) _______________ deposit is a credit added to a bank account electronically in place of a check that reduces the the cost of processing a paper check.

Automated teller machines Credit cards Financial counseling

Services that many commercial banks offer customers include:

To find the best loan deal quickly and easily To have funds available with the use of ATMs

Technology allows the consumer:

Insures bank accounts

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the U.S. government that:

Is composed of the Board of Governors and members of the Reserve banks Is a policy making body

The Federal Reserve's Open Market Committee:

Is composed of the Board of governors and members of the Reserve Banks Is a policy making body

The Federal Reserve's Open Market Committee:

Through the use of its loans and financial policies

The IMF and World Bank can create a strong influence on a government:

Countries

The International Monetary Fund (IMF) and World Bank can provide loans to:

Promoting international commerce

The International Monetary Fund (IMF) has a strong interest in:

Create cooperative monetary policies Create stable exchange systems

The International Monetary Fund (IMF) was established to:

Only M-2 and institutional money market funds

The M-3 (money supply) includes:

Insurance

The National Credit Union Administration (NCUA) provides ________________ for depositors in credit unions.

Economic development

The World Bank is responsible for financing:

M-1

The ___________ includes coins and paper bills, demand deposits, share drafts, and traveler's checks.

Reserve requirement

The _______________ is a powerful tool of the Federal Reserve that controls the amount of money banks have available to lend to customers.

Include banks and consumers

The advisory councils of the Federal Reserve:

Both private and government sectors

The banking crisis was created by failures in:

Has made problems throughout the world economy

The banking crisis:

Written checks

The banking industry is developing ways to reduce the cost and discourage the use of:

Banks to settle the check payments between banks in different parts of the country

The check clearing role of the Federal Reserve allows:

Increased

The competition between banks and non-banks has ______________, with the dividing line becoming less apparent.

The IMF is more for international currency policies

The differences between the World Bank and IMF include the fact that:

Bartering

The exchange of goods and services for other goods and services is called:

Five

The federal reserve system has ____________ major parts.

Other sources of funds

The financial crisis has made many small businesses look for ___________.

Land

The first banks created in the early days of America to aid farmers were called ___________ banks.

National banks Money on the gold standard

The following have played major parts in the debate on the U.S. economy throughout history, including:

Discount

The interest rate the FED charges for loans to member banks is called the ______________ rate.

Make the economy as stable as possible

The main goal of the Federal Reserve is to use its powers to:

Control the federal budget

The methods the Federal Reserve uses to manage the economy include all EXCEPT:

Supply

The money ______________ is the amount of money the Federal Reserve makes available for people to buy goods and services.

M-2

The money supply term that includes accounts that can be accessed quickly and easily and most savings accounts, mutual funds, and Certificates of Deposit is ____________.

M-1

The money supply term that refers to money that can be accessed quickly and easily is ___________.

Prevent another crisis of bank failures

The primary reason for the creation of the Federal Reserve was to:

Money

The ready availability of ______________ is critical to the creation of economic growth and jobs.

The percentage amount of a bank's checking and savings that must be kept in the bank

The reserve requirement is:

It made business and trade more difficult Some local governments issued their own currency The barter system was common

The results of the weakness of the banking system in the early days of the United States included the fact that:

M-3

The term for the money supply that includes cash, checking accounts, Certificates of Deposit, money markets, and big deposits such as institutional money market funds is:

The bank panic of 1907

Throughout the history of the United States, central banks were created and disbanded with much controversy until _____________ ensured that a central bank was needed.

Check account balances Transfer funds Pay bills

Top U.S. retail banks allow customers to access their accounts online so they can:

Putting more information in cyberspace Poor security of electronic data

Ways modern banking practices have made the banking system less secure include:

Electronic funds transfer systems Debit cards Credit cards

Ways that modern banking practices have made the banking system more efficient include:

To provide insurance for depositors

What is the purpose of the Savings Association Insurance Fund (SAIF)?

The position of the U.S. economy relative to other economies

What makes the dollar strong or weak is:

Less

When the Federal Reserve increases the discount rate, it will tend to make banks borrow _________ from the Fed.

Decrease

When the Federal Reserve wants to encourage economic activity, it will ________________ the discount rate.

They are tax-exempt organizations They are member-owned They are nonprofit organizations

Which is correct concerning credit unions?

Banks are equally responsible to their depositors and borrowers

Which is the correct statement about banks and their customers?

Federal Open Market Committee Board of Governors

Which of the following are considered to be part of the Federal Reserve?

Brokerage services Accept loan applications Investment services

Which of the following are services provided by non-banks?

A way to end funds from one computer to another

Which of the following best describes electronic funds transfer (EFT)?

Non-banks that offer financial services Commercial banks Savings and loans

Which of the following institutions are members of the U.S. banking system?

Advisory councils

Which of the following is part of the Federal Reserve?

Certificates of deposit Money market accounts Savings accounts

Which of the following would be considered an example of the M-2 (money supply)?

Money market accounts Savings accounts Certificates of deposit

Which of the following would be considered an example of the M-2 (money supply)?

Savings accounts Money market accounts Certificates of deposit

Which of the following would be considered an example of the M-2 (money supply)?

Falling

Which type of dollar value means that the amount of goods and services you can buy with a dollar decreases?

Rising

Which type of dollar value means that the amount of goods and services you can buy with a dollar increases?

The banking system will be needed to support the farmers, manufacturers, and business people of the nation with credit and a common money supply.

Why will a strong country have the need for a strong banking system?

Pension

________ funds are monies put aside by corporations and others for the retirement of their employees.

Money

__________ is anything that can be used for payment of goods and services.

M-3

___________ is the most inclusive of the money supply definitions that include cash, checking, savings, and institutional money market funds.

Banks

_____________ can exchange currency from one country into another currency.