978-1259723223 Test Bank TBChap034 Part 3

100. Between September 2007 and September 2009,

101. New York Life, Prudential, and Hartford are all primarily

102. Wells Fargo, J.P. Morgan Chase, and Citibank are all primarily

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Difficulty: 01 Easy

Learning Objective: 34-08 Identify the main subsets of the financial services industry in

the United States and provide examples of some firms in each category.

Test Bank: I

Topic: The Postcrisis U.S. Financial Services Industry

103. Charter One, Pentagon Federal Credit Union, and Boeing Employees Credit Union are all

primarily

104. TIAA-CREF, Teamsters’ Union, and CalPERS are all primarily

105. TD Ameritrade, Charles Schwab, and Merrill Lynch are all primarily

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D. securities firms.

106. In 2009, approximately how much of the money on deposit was held by the three largest

U.S. banks?

107. Firms whose central business is to offer security advice and buy and sell individual stocks

and bonds for clients are known as

108. Firms whose central business is providing individual account shares of a group of stocks,

bonds, or both are known as

109. Which of these pairs of financial institutions are most alike in terms of their main lines of

business?

110. The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 in

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Blooms: Remember

Difficulty: 01 Easy

Learning Objective: 34-08 Identify the main subsets of the financial services industry in

the United States and provide examples of some firms in each category.

Test Bank: I

Topic: The Postcrisis U.S. Financial Services Industry

111. (Consider This) Credit cards are

112. (Consider This) Which of the following is not part of the M2 money supply?

113. (Consider This) Credit card balances are

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AACSB: Knowledge Application

A c c e s s i b i l i t y : Keyboard Navigation

Blooms: Remember

Difficulty: 01 Easy

Learning Objective: 34-02 List and describe the components of the U.S. money supply.

Test Bank: I

Topic: The Components of the Money Supply

114. (Last Word) During the financial crisis of 2007–2008, the Federal Reserve

115. (Last Word) During the financial crisis of 2007–2008,

116. (Last Word) Solvent firms face the threat of bankruptcy during a financial crisis

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firms.

B. because the value of their assets is less than the value of their debts.

C. when many assets are illiquid, making it difficult to make timely payments on debt.

D. because the Federal Reserve extends loans to these firms at high rates of interest.

117. (Last Word) The Federal Reserve policy of “extend and pretend”

118. (Last Word) Which of the following best describes the policy of “extend and pretend”?

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written consent of McGraw-Hill Education.

Blooms: Understand

Difficulty: 02 Medium

Learning Objective: 34-07 Discuss the actions of the U.S. Treasury and the Federal

Reserve that helped keep the banking and financial crisis of 2007-2008 from worsening.

Test Bank: I

To pic: The Policy Response to the Financial Crisis

True / False Questions

119. The M2 money supply is larger than the M1 money supply.

120. The M2 money supply may be larger or smaller than the M1 money supply, depending on

the size of small-denominated time deposit balances and money market mutual fund balances

held by individuals.

121. Checkable deposits held in savings and loan institutions, mutual savings banks, and credit

unions are part of the M1 definition of the money supply.

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written consent of McGraw-Hill Education.

Learning Objective: 34-02 List and describe the components of the U.S. money supply.

Test Bank: I

To pic: The Components of the Money Supply

122. Currency and coins held by banks are part of the M1 definition of money supply.

123. Gold backs the U.S. money supply.

124. The 12 Federal Reserve Banks are governmentally owned but privately controlled.

125. The U.S. Treasury is the only agency authorized to put money into circulation in the U.S.

economy.

126. Thrifts are known as “banker’s banks” because they lend money to commercial banks.

127. As of March 2009, the federal government and the Federal Reserve had spent $170 billion

to keep AIG financially afloat.

128. Subprime mortgage loans are so named because the rates charged are below the prime

interest rate.

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written consent of McGraw-Hill Education.

AACSB: Knowledge Application

A c c e s s i b i l i t y : Keyboard Navigation

Blooms: Remember

Difficulty: 01 Easy

Learning Objective: 34-06 Identify and explain the main factors that contributed to the

financial crisis of 2007-2008.

Test Bank: I

To pic: The Financial Crisis of 2007 and 2008

129. The programs enacted to bail out the financial system from crisis in 2007 and 2008 helped

alleviate the moral hazard problem in the financial industry.

130. As part of its response to the financial crisis of 2007 and 2008, Federal Reserve Banks

began paying interest on reserve deposits.

131. Fidelity, Putnam, Janus, and Vanguard are examples of mutual fund companies.

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written consent of McGraw-Hill Education.

Difficulty: 01 Easy

Learning Objective: 34-08 Identify the main subsets of the financial services industry in

the United States and provide examples of some firms in each category.

Test Bank: I

To pic: The Postcrisis U.S. Financial Services Industry

132. Laws passed in the late 1990s restricted the activities of financial firms to narrowly

defined services they could provide, prompting the financial crisis of 2007 and 2008.

133. (Consider This) Credit cards are defined as money because they facilitate transactions.

Multiple Choice Questions

134. The functions of money are to serve as a

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Learning Objective: 34-01 Identify and explain the functions of money.

Test Bank: II

Topic: The Functions of Money

135. When a consumer wants to compare the price of one product with another, money is

primarily functioning as a

136. When a banker records how many dollars each of his borrowers owes the bank, money is

serving as

137. What function is money serving when you deposit money in a savings account?

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written consent of McGraw-Hill Education.

A c c e s s i b i l i t y : Keyboard Navigation

Blooms: Remember

Difficulty: 01 Easy

Learning Objective: 34-01 Identify and explain the functions of money.

Test Bank: II

Topic: The Functions of Money

138. What function is money serving when you use it when you go shopping?

139. Which of the following functions of money enables society to gain the benefits of

geographic and labor specialization?

140. If product prices were stated in terms of marbles, then marbles would be functioning

primarily as

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D. a unit of account.

141. Money functions as a store of value if it allows you to

142. One major advantage of money serving as a medium of exchange is that it allows society

to

143. Money eliminates the need for a coincidence of wants in trading primarily through its role

as a

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written consent of McGraw-Hill Education.

A. unit of account.

B. medium of exchange.

C. store of value.

D. medium of deferred payment.

144. An asset’s liquidity refers to its ability to be

145. Which one of the following is considered to be a “stock” rather than a “flow” variable?

146. The M1 money supply is composed of

147. The currency, or money, of the United States, like those of other countries, is

148. The paper money, or currency, in the United States essentially represents

149. Checkable deposits are

150. Currency and checkable deposits are

151. The paper currencies of the United States are also called

152. As of February 2016, more than half of the money supply (M1) was in the form of

153. Which of the following institutions does not provide checkable-deposit services to the

general public?

154. Which definition(s) of the money supply include(s) only items that are directly and

immediately usable as a medium of exchange?

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written consent of McGraw-Hill Education.

Learning Objective: 34-02 List and describe the components of the U.S. money supply.

Test Bank: II

Topic: The Components of the Money Supply

155. Money supply M1 does not include the currency held by

156. Which of the following is included as part of the M1 money supply?

157. Joe deposits $200 in currency into his checking account at a bank. This deposit is treated

as