MIE 201 Chapter 15
Select from the following three of the characteristics of money. - divisibility - portability - difficult to counterfeit - international acceptance - historical value
- divisibility - portability - difficult to counterfeit
Businesses that offer short-term loans at substantially higher rates of interest than banks are called ______ comapnies.
Finance
The study of money: how its managed by individuals, companies, and governments is known as _______.
Finance
Shadow banking activities are ________.
Increasing
Automated clearinghouses permit payments such as deposits and withdrawals to and from a bank account by the use of _______.
Magnetic tape
Anything that can be used for payment of goods and services is defined as _______.
Money
Limited check writing and possible minimum amount restrictions but higher interest rates make _______ _______ accounts an option for individuals as well as businesses.
Money market
A money market fund is a type of _______.
Mutual fund
What is a unique, defining feature of a Roth IRA?
No tax is paid on the distribution of funds when it is drawn at retirement
_______ buy and sell stocks, bonds, and other securities for their customers. Merrill Lynch and Charles Schwab are examples.
Brokerage firms
The _______ function of the Federal Reserve enables banks to settle demand deposits between member banks.
Check clearing
Something pledged as a guarantee that a buyer will repay a loan is referred to as _______.
Collateral
A _______ allows a buyer to pay for merchandise at a later date by using a pre-approved line of credit granted by a bank or finance company.
Credit card
The Fed's authority to establish and enforce credit rules for financial institutions and private investors is done through _______.
Credit controls
A(n) _______ card looks like a credit card but functions like a check.
Debit
In very rare cases (the depression of the 1930s) the United States has suffered from ________, when the actual purchasing power of the dollar has increased as prices declined.
Deflation
The reserve requirement is the percentage of _______.
Deposits that must be kept in reserve by banking institutions
The rate of interest the Fed charges to loan money to any banking institution to meet reserver requirements is called the _______ rate.
Discount
Nonfinancial firms that help finance their customers' purchases of expensive equipment are called ________ firms.
Diversified
Bartering lacks the ability of _______. The use of quarters, dimes, and nickles makes this characteristic of money possible.
Divisibility
The characteristics of money that relates to it having a long useful life is ________.
Durability
Paperless transfer of funds by means of an electronic terminal are called _______ _______ _______.
Electronic funds transfer
The _______ was established in 1933 and insures individual bank accounts for Americans.
FDIC
Paper money not readily convertible to a precious metal is called _______ money.
Fiat
Compared to transactions involving a teller, transactions at ATMs are _______ for the bank.
Half as expensive
Giesele discovered that her wallet was stolen. In it, she has a credit card and a debit card. Which of the following statements is TRUE regarding this situation? - If the thief uses her credit card, there is a good chance Giesele will not be liable for the charges - If the thief uses her debit card, Giesele will not be liable for the charges - Giesele will not be liable for any charge made on either the credit or the debit card - Giesele will automatically be liable for the charges regardless of whether the debit or credit card was used
If the thief uses her credit card, there is a good chance Giesele will not be liable for the charges
Which of the following statements is true about the taxation of a Roth IRA? - It is only taxed when the person withdraws the money at retirement - It is taxed, one time only, upon set-up of the account - It is taxed twice, once upon set-up and again when the funds are withdrawn - It is not taxed when the funds are withdrawn at retirement
It is not taxed when the funds are withdrawn at retirement
What does it mean that money should be difficult to counterfeit?
It should not be able to be duplicated illegally
Which type of fund invests specifically in short-term securities?
Money market funds
As it relates to banking, which of the following is TRUE about the financial crisis and economic recessions that began in 2007 and lasted into 2012? - All banks were taken over by the government - The consolidation of larger banks accelerated - Many small, independent banks were formed - Large international banks split to form smaller banks
The consolidation of larger banks accelerated
More than half of all adults indicate that their preferred banking method is through the use of ________.
The internet
Open market operations consist of the buying and selling of ________.
U.S. Treasury bills
The trading of goods and services for other goods and services is called _______.
Bartering
A checking account is also called a(n) ________.
Demand deposit
The largest pension fund in the US is _______.
Social Security
Which of the following are major responsibilities of the Fed? - Set debit card expenses limits - Control credit card payments - Control the supply of money - Regulate banks and other financial institutions - Manage regional and national checking account procedures
- Control the supply of money - Regulate banks and other financial institutions - Manage regional and national checking account procedures
Which of the following are descriptors of "the Fed"? - Establish in 1913 - Part of state government - Organized into 12 regions - Regulates the U.S. financial industry - Elected branch of the federal government - Prints U.S. currency
- Establish in 1913 - Organized into 12 regions - Regulates the U.S. financial industry
Which of the following are considered nonbank financial institutions? - Insurance companies - Finance companies - Savings and load associations - Pension funds - Brokerage firms - Credit unions
- Insurance companies - Finance companies - Pension funds - Brokerage firms
Select from the following the three services that many commercial banks offer to customers. - Life insurance policies - Mutual fund investment - Issuance of credit cards - Business counselling - Offering home equity loans - Safe deposit box rental
- Issuance of credit cards - Offering home equity loans - Safe deposit box rental
Which of the following came out of the Credit CARD Act of 2009? - It made all card issuers charge the same interest rate - It made clearer the due dates on billing rates - It limited card issuers' ability to raise interest rates - It allowed people more time to pay their bills - It removed the co-signing requirements for minors
- It made clearer the due dates on billing rates - It limited card issuers' ability to raise interest rates - It allowed people more time to pay their bills
Select from the following those items which are accurate regarding credit unions. - They are owned by state governments - They are also called "thrifts" - Members are allowed to share in the credit union's profit - They are considered financial institutions - Members are allowed to vote for directors
- Members are allowed to share in the credit union's profit - They are considered financial institutions - Members are allowed to vote for directors
Which of the following are members of the U.S. banking system? - Financial investment firms - Mutual savings banks - Credit unions - Savings and loans - Internet trading firms - Commercial banks
- Mutual savings banks - Credit unions - Savings and loans - Commercial banks
Which two of the following statements are true about commercial banks? - They are the largest of all financial institutions - They are the oldest of all financial institutions - They are often called "thrifts" - They are owned and controlled by depositors
- They are the largest of all financial institutions - They are the oldest of all financial institutions
Select the items that describes a certificate of deposit. - Type of savings account - covers periods such as six months, one year, or seven years - Also known as demand deposit - Substantial penalty for premature withdrawal
- Type of savings account - covers periods such as six months, one year, or seven years - Substantial penalty for premature withdrawal
When the Fed wants to _______ the money supply in the country, it _______ the discount rate. - increase; lowers - decrease; raises - increases; raises - decreases; lowers
- increase; lowers - decrease; raises
Select from the following the four tools that the Federal Reserve uses to manage the economy. - reserve requirements - discount rate - credit controls - open market operations - federal budget - legislation
- reserve requirements - discount rate - credit controls - open market operations
How is money being utilized when consumers use it as a guide for the value of goods and services, such as knowing that $2 will buy a dozen large eggs?
As a measure of value
The fee that an insurance company charges for coverage is known as _______.
A premium
Which of the following provides 24-hour banking to consumers by dispensing cash and accepting deposits? - automated clearing house - money market account - electronic checking account - automated teller machine
Automated teller machine
If people do not trust the value of a nation's money, companies will not accept it as payment for goods and services. This describes the ________ characteristic of money.
Acceptability
All of the following are part of the Fed's regulatory functions EXCEPT _______. - enforcing banking rules that affect monetary policy - authorizing mergers - determining which nonbanking activities should be prohibited - conducting annual surprise bank examinations - accepting money deposits from individual consumers
Accepting money deposits from individual consumers
_______ funds provide professional financial management for investors without the time and/or expertise to invest in particular securities.
Mutual
Mostly found in New England, _______ were originally established to provide a safe place for savings of particular groups of people, like fishermen.
Mutual savings banks
The _______ regulates and charters credit unions as well as insures deposits through its National Credit Union Insurance Fund.
NCUA
Which of the following types of accounts offers a small interest rate and withdrawal of funds by writing a check?
NOW
What are monies put aside by corporations and other for the retirement of their employees called?
Pension funds
The problem of carrying pockets full of large colored rocks as an exchange medium is solved with money. What characteristic does money solve over large rocks?
Portability
The new issue market is called a(n) ________ market because the sale of the securities is for the first time.
Primary
Which of the following is not an advantage of direct deposit to consumers?
Reduced deposit fees
Often called "thrifts," this financial institution primarily offers savings accounts and makes long-term loans for residential mortgages.
Savings and loan association
Inflation primarily disrupts the principle of the _______ of money.
Stability
As a _______ of value, money serves as a way to accumulate wealth.
Store
The health of the economy has a direct effect on money as a ________.
Store of value
Which institution took unprecedented action during the 2007-2008 financial crisis by buying troubled assets from banks and lending money to nonbanks?
The Federal Reserve
Which institution is responsible for supervising the federal insurance funds that protect the deposits of member institutions?
The Federal Reserve Board
Which of the following statements best describe the role of investment bankers? - They regulate the stock exchange - They pool the money of investors for mutual fund investments - They underwrite new issues of securities for corporations, states, and municipalities - They invest in other mutual funds
They underwrite new issues of securities for corporations, states, and municipalities
A savings account is called a(n) _______ deposit because the bank can require you to make prior notice before withdrawal.
Time
What is the primary purpose of money in a society?
To enable a person or organization to transform a desire into an action
