Chapter 15 Quiz

The _____ is an independent, quasi-public corporation backed by the full faith and credit of the U.S. government that insures deposits in commercial banks and thrift institutions for up to a ceiling of $250,000 per account.

Federated Deposit Investment Corporation (FDIC)

The purchase or sale of U.S. government bonds by the Federal Reserve to stimulate or slow down the economy is called:

an open market operation

Adam Hassib works for the Federal Deposit Insurance Corporation. He arrives unannounced at member banks where he conducts audits of managerial and financial practices. Hassib is a:

bank examiner

Finance companies make loans to people who could not get credit anywhere else. To compensate for taking this extra risk, finance companies:

charge higher interest rates than commercial banks do

State banks are:

chartered by the state in which they are based

When Hadley Jones wanted to buy a truck so he could get to and from his job in a nearby community, his credit rating was poor. Jones found that the only place he could get a loan was from a(n) _____ finance company.

consumer

Financial institutions can be divided into two broad categories. These are ______ institutions.

depository and nondepository

The _____ characteristic of money is revealed by the fact that a dollar can be converted into four quarters or ten times.

divisibility

Cupcakes, hamburgers, and cut flowers would not make good mediums of exchange because they lack the key characteristic of:

durability

Money is used as:

all of the above

Which of the following statements about credit unions is true?

None of the above statements about credit unions is true.

_____ are two types of thrift institutions.

Savings banks and savings and loan associations

The Federal Reserve controls the minimum amount that a purchaser of securities must deposit with a stock brokerage firm in order to purchase stock. This minimum amount is called the _____ requirement.

margin

The most frequently used and the most flexible tool that the Federal Reserve has that it can use to change the economic environment is:

open market operations

Boulders, building trusses, and lead ingots would not make good mediums of exchange because they lack the key characteristic of:

portability

The three principal tools of the Federal Reserve System are:

reserve requirements, discount rate, and open market operations

Weeds, sand, and paper clips would not make good mediums of exchange because they lack the key characteristic of:

scarcity

Ruth Hu recently inherited $200,000. She has invested the inherited money in real estate and government securities. Hu is using her money as a:

store of value

Money market deposit accounts and certificates of deposit are officially called ______ deposits.

time

Hal Silverstein has a savings account, also called a _____, at his local credit union.

time deposit