QUESTION Which type of banking account offers interest rates competitive with those of brokerage firm funds? A) standard checking account B) Super-NOW account C) savings account D) money market accounts E) certificates of deposit ANSWER Answer: D Explanation: D) Money market accounts are bank accounts that offer interest rates competitive with those of brokerage […]
QUESTION How is a revolving credit agreement different from a line of credit? A) Only in a revolving credit agreement does the bank guarantee the loan and is the bank obligated to loan funds up to the credit limit. B) Only in a revolving credit agreement does the bank specify how much it is willing […]
QUESTION Capital One Trust is a commercial bank. Which of the following is NOT one of the ways that it makes money? A) charging interest on loans B) charging fees for account maintenance C) charging fees as forms of penalties D) issuing government bonds E) offering life insurance ANSWER Answer: D Explanation: D) Banks […]
QUESTION If Sam, owner of a bicycle repair shop, repairs Jim’s bicycle in exchange for a dinner at Jim’s restaurant, what has just occurred? A) a barter B) a financial leverage C) a private placement D) an indenture term E) a term-loan agreement ANSWER Answer: A Explanation: A) Bartering is the trading of goods […]
QUESTION Which type of bank account requires an even higher minimum balance than NOW accounts (such as $5,000 compared to $1,000)? A) standard checking account B) Super-NOW account C) savings account D) money market account E) certificate of deposit ANSWER Answer: B Explanation: B) An account requiring an even higher minimum balance than a […]
QUESTION Which of the following is NOT one of the policy tools through which the Fed controls the money supply? A) the reserve requirement B) open-market operations C) the discount rate D) the consumer price index E) the federal funds rate ANSWER Answer: D Explanation: D) The Fed controls the money supply through three […]
QUESTION Which of the following is NOT a common advantage of using money in an economic transaction? A) Money is often used as a form of collateral. B) Money is a store of wealth. C) Money is stable, in the sense that it has the same value to everyone. D) Money is not easily copied […]
QUESTION Which of the following is NOT true of the U.S. money supply? A) The Federal Reserve System makes it available. B) Its most common measurement is referred to as M2. C) It includes currency, traveler’s checks, and various bank checking account balances. D) Cash or currency makes up roughly 80 percent of it. E) […]
QUESTION What does it mean to say that all commercial banks are chartered? A) They are not Fed members. B) All of their accounts are considered within the money supply by M1’s definition. C) They have received government permission to operate. D) They belong to a group of other local banks that pool funds. E) […]
QUESTION What differentiates M1 from M2? A) M1 is a much broader definition of the money supply than M2. B) M2 includes only currency in its definition of the money supply. C) M1 is the much more commonly used measure of the money supply. D) M1 includes assets such as mutual funds and money market […]
