Intro to Business - Chapter 15

Dakota Mining Company pays its bills and employees with checks drawn on a bank from another part of the country. Checks usually take about three days to clear the firm's account. _____ is the advantage gained during the check-clearing time.

Float

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

Credit cards:

are accurately described by all of the above

TD Ameritrade is a company that buys and sells stocks and bonds as well as providing its customers with advice on when to buy and when to sell. TD Ameritrade is an example of a _____, a type of nondepository financial institution.

brokerage firm

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

Which of the following financial institutions is a not-for-profit institution?

credit union

To stimulate the economy, the Federal Reserve can:

lower the reserve requirement

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

For a college student who needs to buy an $80 textbook, the money she received from her grandmas to help purchase of school supplies would be used as a:

medium of exchange

A bank chartered by the Comptroller of Currency, a branch of the U.S. Treasury Department, is called a _____ bank.

national

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

scarcity

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

time

The Federal Deposit Insurance Corporation (FDIC):

insures deposits in commercial banks

In terms of financial intermediation, the couple who went to a bank and took out a $200,000 loan to buy a new house is an example of a:

demander of funds

The Banking Act of 1933 gave the Federal Reserve System the authority to:

do all of the above

When bank examiners conclude that a bank has serious financial problems, the FDIC can:

do any of the above

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

durability

Thrift institutions were formed specifically to make home mortgage loans and to:

encourage household savings

A bank is engaged in _____ when it accepts the farmer's deposit of $127,000, and then makes a business loan of $50,000 to a small business owner.

financial intermediation

Competing against foreign banks can be difficult for U.S. banks because:

foreign banks are subject to fewer regulations than U.S. banks