intro to business chapter 15

The ________ insures individual bank accounts.

Federal Deposit Insurance Corporation

Which of the following actions is the Federal Reserve Board most likely to take in an attempt to increase the money supply in the economy?

buy government securities

A money market account differs from an interest-bearing checking account in that the owners of a money market account

can write only a limited number of checks each month.

The oldest and largest of all financial institutions are

commercial banks

As a measure of value, money primarily serves as a(n)

common standard or yardstick of the worth of goods and services.

All of the following are actions the Federal Reserve Board takes as part of its regulatory functions EXCEPT

controlling the total amount of credit borrowing in the stock market.

The major difference between banks and credit unions is that

credit unions are owned and controlled by their depositors.

Which of the following is a simpler medium of exchange than bartering?

deciding on a single item that can be freely converted to any other good upon agreement between parties

Which of the following characteristics of money explains why many countries are discontinuing large denominated bills?

difficulty to counterfeit

Coins are used primarily to provide

divisibility

Money must be very difficult to counterfeit, that is, to

duplicate illegally

To be used as a medium of exchange, money must be

durable

A nonbanking financial institution that buys and sells stocks, bonds, and other securities for its customers is called a

brokerage firm

All of the following are true regarding coins EXCEPT

they are primarily used because of their durability.

Why is the life span of a $5 note likely to be shorter than that of a $100 note?

A $100 note is less frequently passed between users.

Which of the following is a difference between a money market fund and a money market account?

A money market fund represents a pool of funds, while a money market account is basically a specialized, individual checking account.

Which of the following is a major difference between credit cards and debit cards?

Debit cards do not have the same level of protection as credit cards.

The ________ is the guardian of the American financial system.

Federal Reserve Board

________ is best described as a paper money that is not readily convertible to a precious metal such as gold.

Fiat money

________ are businesses that protect their clients against financial losses from certain specified risks in exchange for a fee, called a premium.

Insurance companies

Which of the following effects is seen on the money supply and the economy when the Federal Reserve Board raises the discount rate?

Interest rates increase, the money supply decreases, and economic activity slows down.

The ________ Act prohibited commercial banks from being in the insurance and investment banking business.

Glass-Steagall

The ________ Act repealed the Glass-Steagall Act, putting U.S. commercial banks on the same competitive footing as European banks and providing a more level playing field for global banking competition.

Gramm-Leach-Bliley

the acronym NOW, when used by financial institutions, stands for ________ and is a type of interest-bearing checking account.

Negotiable Order of Withdrawal

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

New York Federal Reserve Bank.

________ allow consumers to perform an ever-widening array of financial transactions from their personal or work computers.

Online banking services

Which of the following effects is seen on the money supply and the economy when the Federal Reserve Board restricts credit controls?

People are discouraged from making major purchases, decreasing economic activity.

Which of the following is likely to occur in a country where money is unstable?

People will spend their money as fast as they can to keep it from losing more of its value.

Which of the following is a peer-to-peer lender?

Prosper

Which of the following is the largest pension fund?

Social Security

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?

The Dodd-Frank Act

Which of the following is true regarding savings accounts?

Their funds can be moved to a checking account or turned into cash.

Which of the following is a reason that credit cards are a popular substitute for cash payments?

They are accepted by merchants around the world

Which of the following is true of checks?

They can be rendered worthless in case of a suspected forgery.

Which of the following is true of finance companies?

They offer short-term loans.

Which of the following is a reason that financial institutions want consumers to use debit cards?

They reduce the number of teller transactions and check processing costs.

Which of the following types of institutions is similar to a savings and loan association but is owned by its depositors?

a mutual savings bank

The Federal Reserve took all of the following actions during the most recent financial crisis between 2007 and 2008 EXCEPT it

gave a directive to change the management of the banks that had to be bailed out.

All of the following are ways the Credit CARD Act of 2009 regulates the practices of credit card companies EXCEPT it

gave people less time to pay bills.

All of the following are advantages of direct deposit payments EXCEPT

increased check-processing expenses.

All of the following are true regarding deflation EXCEPT it

is always a good thing for consumers

A debit card

looks like a credit card but works like a check.

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

lowers the discount rate.

When the Federal Reserve Board sells government securities, the

money supply in the economy decreases

For money to function as a medium of exchange, it must be easily moved from one location to the next. Which of the following characteristics of money does this statement reflect?

portability

All of the following are major responsibilities of the Federal Reserve Board EXCEPT

providing short-term loans to businesses.

In regards to the Federal Reserve Board's credit controls, which of the following can the Fed do?

raise and lower minimum down payment amounts and payment periods

Which of the following factors has challenged the banking industry and forced it to undergo changes?

rapid technological innovations

Commercial banks

rely on checking and savings accounts for funds.

During 2007-2008, which of the following contributed to the collapse of the financial markets?

securities backed by subprime mortgages

________ banking refers to companies performing banking functions of some sort that are not regulated by banking regulators.

shadow

When money serves as a way to accumulate wealth, money primarily functions as a

store of value.

In reaction to the financial meltdown and severe recession between 2007 and 2008, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. What does the full name of this act imply?

that it intends to eliminate the ability of banks to create this type of financial problem in the future

The Federal Reserve Board controls the amount of money available in the economy

through monetary policy.

Savings accounts are also known as

time deposits

Which of the following is a reason Congress established insurance funds for banks?

to make people feel secure about their savings