Introduction to Business – Chapter 15 Test Bank | Latest Exam Questions & Verified Answers

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Chapter 15 UNDERSTANDING MONEY AND FINANCIAL INSTITUTIONS


TRUE-FALSE QUESTIONS

Title: ANSWER: T EFERENCE: Show Me the Money LEARNING OUTCOME: 1
1. Money is anything that is acceptable as payment for goods and services.
a. True
b. False

Title: ANSWER: F REFERENCE: Show Me the Money LEARNING OUTCOME: 1
2. Durability and simplicity are two important characteristics of money.
a. True
b. False

Title: ANSWER: F REFERENCE: Show Me the Money LEARNING OUTCOME: 1
3. Another term for a checking account is a time deposit.
a. True
b. False

Title: ANSWER: T REFERENCE: Show Me the Money LEARNING OUTCOME: 1
4. Examples of time deposits are savings accounts, money market deposit accounts, and certificates
of deposit.
a. True
b. False

Title: ANSWER: F REFERENCE: The Federal Reserve System LEARNING OUTCOME: 2
5. The three tools used by the Federal Reserve to manage monetary policy are reserve requirements,
the prime rate, and the discount rate.
a. True
b. False

Title: ANSWER: T REFERENCE: The Federal Reserve System LEARNING OUTCOME: 2
6. By lowering the reserve requirement, the Federal Reserve tries to make more money available for
loans and stimulate the economy.
a. True
b. False

Title: ANSWER: F REFERENCE: The Federal Reserve System LEARNING OUTCOME: 2
7. The prime rate is the interest rate that the Federal Reserve charges member banks for loans.
a. True
b. False

Title: ANSWER: T REFERENCE: The Federal Reserve System LEARNING OUTCOME: 2
8. Margin requirements tell the minimum amount of cash an investor must put up when borrowing
from a bank or brokerage firm to purchase stock.
a. True
b. False

,Title: ANSWER: T REFERENCE: U.S. Financial Institutions LEARNING OUTCOME: 3
9. Depository financial institutions include commercial banks, thrift institutions, and credit unions.
a. True
b. False

Title: ANSWER: T REFERENCE: U.S. Financial Institutions LEARNING OUTCOME: 3
10. National banks must belong to the Federal Reserve System and must carry FDIC insurance.
a. True
b. False

Title: ANSWER: F REFERENCE: U.S. Financial Institutions LEARNING OUTCOME: 3
11. Credit unions are state-chartered banks that operate much like savings and loan associations.
a. True
b. False

Title: ANSWER: T REFERENCE: U.S. Financial Institutions LEARNING OUTCOME: 3
12. The nation's insurance companies are major suppliers of funds to the U.S. financial system.
a. True
b. False

Title: ANSWER: F REFERENCE: U.S. Financial Institutions LEARNING OUTCOME: 3
13. A brokerage firm is an example of a depository financial institution.
a. True
b. False

Title: ANSWER: T REFERENCE: U.S. Financial Institutions LEARNING OUTCOME: 3
14. Consumer finance companies make loans to individuals; commercial finance companies make
loans to businesses.
a. True
b. False

Title: ANSWER: F REFERENCE: Insuring Bank Deposits LEARNING OUTCOME: 4
15. The Federal Deposit Insurance Corporation (FDIC) only insures deposits at commercial banks.
a. True
b. False

Title: ANSWER: T REFERENCE: Insuring Bank Deposits LEARNING OUTCOME: 4
16. The Federal Deposit Insurance Corporation (FDIC) is an independent, quasi-public corporation
backed by the full faith and credit of the United States government.
a. True
b. False

Title: ANSWER: F REFERENCE: Insuring Bank Deposits LEARNING OUTCOME: 4
17. The Federal Deposit Insurance Corporation (FDIC) charges the same insurance premiums to all
member banks.
a. True
b. False


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, Title: ANSWER: T REFERENCE: Insuring Bank Deposits LEARNING OUTCOME: 4
18. The Federal Deposit Insurance Corporation (FDIC) monitors the banking practices of the
institutions that it insures.
a. True
b. False


Title: ANSWER: T REFERENCE: International Banking LEARNING OUTCOME: 5
19. U.S. banks provide better customer service and have access to more sources of funding than
local banks in many countries.
a. True
b. False

Title: ANSWER: F REFERENCE: International Banking LEARNING OUTCOME: 5
20. U.S. banks have had no trouble competing successfully against foreign banks.
a. True
b. False

Title: ANSWER: T REFERENCE: International Banking LEARNING OUTCOME: 5
21. U.S. banks provide loans to foreign governments.
a. True
b. False


MULTIPLE-CHOICE QUESTIONS

Title: ANSWER: C REFERENCE: Show Me the Money LEARNING OUTCOME: 1
1. ______ is anything (regardless of form) that is acceptable as payment for goods and services.
A. Shareholders’ equity
B. Capital
C. Money
D. A fixed asset
E. Revenue

Title: ANSWER: C REFERENCE: Show Me the Money LEARNING OUTCOME: 1
2. Any object or objects that a group of people use to buy and sell goods and services is called:
A. a countertrade
B. capital
C. money
D. revenue
E. an earned deposit

Title: ANSWER: A REFERENCE: Show Me the Money LEARNING OUTCOME: 1
3. Items that groups of people use as money must be _____ to be acceptable mediums of exchange.
A. scarce, divisible, portable, and durable
B. portable, sortable, profitable, and divisible
C. compatible, durable, universal, sortable
D. distributable, durable, comparable and valuable
E. valuable, durable, compatible and scarce

October 22, 2018 3