Question 1
An organization that provides loans directly to consumers and businesses or aid individuals in obtaining financing for durable goods is called a (n)
Answer
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commercial bank |
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[removed] |
investment bank |
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savings and loan |
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[removed] |
finance company |
2 points
Question 2
The holding-company device to control two or more commercial banks:
Answer
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has diminished in importance in recent years |
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has increased in importance in recent years |
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is limited to state chartered banks |
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is sometimes described as chain banking |
2 points
Question 3
The item on the assets side of a bank’s balance sheet that represents the largest proportion of bank assets is:
Answer
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deposits |
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owner’s capital |
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securities |
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[removed] |
loans |
2 points
Question 4
Capital notes:
Answer
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are subject to reserve requirements |
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[removed] |
are assets of the banks that issue them |
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[removed] |
are always subordinated to the claims of bank depositors |
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[removed] |
reflect short-term borrowing on the part of the bank |
2 points
Question 5
During the colonial period in the nation’s history, banks depended on:
Answer
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their own issue of paper money |
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foreign sources for their loanable funds |
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[removed] |
deposits of foreign currency such as the Spanish dollar |
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[removed] |
the investment of their own stockholders |
2 points
Question 6
Legislation that provided for the separation of commercial banking and investment banking activities in the United States is called
Answer
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[removed] |
Garn–St. Germain Depository Institutions Act |
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[removed] |
Glass-Steagall Act |
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[removed] |
Hunt Commission legislation |
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[removed] |
Depository Institutions Deregulation and Monetary Control Act |
2 points
Question 7
Primary reserves
Answer
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[removed] |
include the cash assets of the firm under the heading “cash and balances due from depository institutions. |
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[removed] |
are short term securities held by banks that are quickly converted into cash at little cost to the banks. |
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[removed] |
reflects the bank’s ability to meet depositor withdrawals. |
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[removed] |
reflects the bank’s ability to keep the value of a bank’s assets greater than its liabilities. |
2 points
Question 8
The principal assets of banks do not include:
Answer
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cash |
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[removed] |
loans |
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[removed] |
time deposits |
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[removed] |
securities owned |
2 points
Question 9
Our system of national banks:
Answer
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was designed to destroy state banking |
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was an integral part of the Federal Reserve Act |
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was replaced by Federal Reserve banking |
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came into existence during the Civil War |
2 points
Question 10
Commercial banks obtain the bulk of their loanable funds from:
Answer
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depositors |
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the issue of certificates of deposit |
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sale of bank stock |
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[removed] |
sale of subordinated debenture bonds |
2 points
Question 11
The Fed shares its depository examining functions with:
Answer
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the Federal Savings and Loan Insurance Corporation |
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the FDIC, Comptroller of the Currency, and state agencies |
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only the Comptroller of the Currency |
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[removed] |
National Credit Union administration and the FDIC |
2 points
Question 12
The Federal Open Market Committee:
Answer
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typically buys and sells long-term corporate bonds |
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[removed] |
is the most powerful and flexible monetary policy tool of the Fed |
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works out of Washington D.C. |
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deals with most of the commercial banks of the nation |
2 points
Question 13
The dynamic actions of the Federal Reserve System:
Answer
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contribute to the smooth everyday functioning of the economy |
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[removed] |
are designed to meet the credit needs of individuals and institutions |
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[removed] |
support depositories and other institutions |
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stimulate or repress the level of prices or economic activity |
2 points
Question 14
The banking system of the United States is a ___________ reserve system because banks are required by the Fed to hold reserves equal to a specified percentage of their deposits.
Answer
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[removed] |
required |
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[removed] |
fractional |
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[removed] |
proportional |
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[removed] |
multiplicative |
2 points
Question 15
The Truth in Lending Act:
Answer
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prohibits discrimination in the granting of credit on the basis of sex, race, color, and religion |
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limits liability on lost or stolen credit cards |
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prohibits unfair or deceptive acts or practices on the part of banks |
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requires prompt correction of errors on a revolving charge account |
2 points
Question 16
The Federal Reserve Banks are owned by:
Answer
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[removed] |
commercial banks |
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[removed] |
the U.S. Treasury |
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[removed] |
national member banks of the Federal Reserve System |
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[removed] |
member banks of the Federal Reserve System |
2 points
Question 17
The primary function of the Federal Reserve System is to:
Answer
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[removed] |
issue currency to member banks |
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[removed] |
regulate the growth of the money supply |
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[removed] |
serve as a fiscal agent for the U.S. government |
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[removed] |
regulate and conduct bank examinations |
2 points
Question 18
__________________ become the most important and effective means of monetary and credit control.
Answer
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[removed] |
Changing reserve requirements has |
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[removed] |
Changing the discount rate has |
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[removed] |
Open market operations has |
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[removed] |
Changing the Treasury bill rate has |
2 points
Question 19
The central bank in the United Kingdom is the:
Answer
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[removed] |
Bank of Britain |
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[removed] |
British Fed |
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[removed] |
British Bank |
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[removed] |
Bank of England |
2 points
Question 20
The members of the Fed Board of Governors are:
Answer
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elected by the member banks |
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[removed] |
appointed by the President of the United States with the advice and consent of the Senate |
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appointed by the Secretary of the Treasury |
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[removed] |
appointed by each of the Federal Reserve banks |
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