Reference no: EM132243955

[1] Commercial banks:

A) make loans to businesses and individuals.

B) provide various services, such as selling traveler's checks.

C) offer demand deposit and other accounts to businesses and individuals.

D) all of these answers are correct.

[2] When we say the U.S. has a dual banking system, we mean that:

A) both the federal and state governments have the right to charter banks.

B) all state banks are regulated by the Federal Reserve and the Federal Deposit Insurance Corporation.

C) all national banks are regulated by the Federal Reserve and the Federal Deposit Insurance Corporation.

D) commercial banks and savings institutions can perform nearly identical functions since the Monetary Control Act of 1980.

[3] Which of the following statements about national banks is FALSE?

A) They are insured by the FDIC.

B) They must join the Federal Reserve.

C) They are regulated by a federal agency.

D) They are owned and managed by the U.S. government.

[4] The Federal Deposit Insurance Corporation:

A) insures federal government securities, such as Treasury Bills.

B) is a private corporation that insures deposits in federally chartered banks.

C) is a government agency that insures deposits in commercial banks up to a specified amount.

D) is required by law to insure deposits in every bank, credit union, and other financial depository institution in the U.S.

[5] Bank failures are usually the result of:

A) population shifts away from banking centers.

B) loan losses combined with deposit withdrawals.

C) interest rate adjustments caused by the Federal Reserve.

D) regulators requiring banks to perform services that are unsuited to the banks' specialty areas.

[6] The total assets and total number of savings institutions and credit unions are:

A) larger than the total assets and total number of commercial banks.

B) smaller than the total assets and total number of commercial banks.

C) larger than the total assets and smaller than the total number of commercial banks.

D) smaller than the total assets and larger than the total number of commercial banks.

[7] The Federal Reserve System was created in:

A) 1789.

B) 1889.

C) 1913.

D) 1946.

[8] The primary function of the Federal Reserve System is to:

A) make loans.

B) print money.

C) lower interest rates.

D) regulate the money supply.

[9] The authorization for the buying and selling of government securities by the Federal Reserve comes from the:

A) U.S. Treasury.

B) Open Market Committee.

C) president of the United States.

D) Securities and Exchange Commission.

[10] The functions of the Federal Reserve Banks include:

A) maintaining reserve accounts.

B) placing currency in circulation.

C) supervising member banks and clearing checks.

D) all of these answers are correct.

[11] The supervision and examination of commercial banks is a responsibility of:

A) the U.S. Treasury Department.

B) the U.S. Internal Revenue Service.

C) each of the Federal Reserve Banks.

D) the Board of Governors of the Federal Reserve System.

[12] Member banks maintain reserve accounts at Federal Reserve Banks because:

A) they are required to do so.

B) accounts are safest at the Fed.

C) the Fed pays high interest rates on these accounts.

D) all of these answers are correct.

[13] Which of the following would increase a financial institution's reserve account balance at a Federal Reserve Bank?

A) The delivery of cash by the Federal Reserve to the financial institution.

B) The clearing of a check that has been deposited in the financial institution.

C) An increase in the number of bad checks written by the financial institution's customers.

D) The clearing of a check that has been written by someone with an account at that institution.

[14] The law that allows banks to use electronic substitute checks for check clearing purposes is:

A) Federal Reserve Regulation CC.

B) the Monetary Control Act.

C) Check 21.

D) U.S. Treasury Regulation CC.

[15] Correspondent banking:

A) is illegal in the United States.

B) is an interbank relationship involving deposits and various services.

C) refers to "bank-by-mail" services offered by many financial institutions.

D) means that when one financial institution's reserve account increases, another institution's reserve account must decrease.