Chapter 20 5 Alan works as a loan officer for a major U.S. commercial bank, specializing in international loans. When considering loans to governments and businesses in other nations

302. (p. 561) Banks prefer that customers use electronic funds transfer rather than traditional methods of payment

because:

A. traditional payments are subject to regulation by the Fed and electronic transactions are not.

303. (p. 562) Rather than receiving a paycheck; Hal authorizes his employer to deposit his pay directly into his

account at the Mortonville Bank. His bank also provides him with a ________card he uses to shop. The retailer

uses the card to transfer money from Hal’s account to the store’s account.

A. credit

304. (p. 562) A few retailers enable their customers to pay for gas by using a ________card that electronically

transmits information through an embedded radio-frequency antenna.

D. e-commerce

305. (p. 562) Visa Buxx and Cobalt-cards are debit cards for:

D. senior citizens.

306. (p. 563) Which of the following is a bank service provided to help companies conduct business in other

countries?

A. transaction letters

307. (p. 563) A __________ represents a promise by a bank to pay a foreign company a given amount if certain

conditions are met.

308. (p. 563) A __________ represents an unconditional promise by a bank to pay a specified amount at a

particular time.

D. guaranteed funds agreement

309. (p. 564) The __________ primarily provides for the financing of economic development projects throughout

the world.

A. International Monetary Fund

310. (p. 564) The World Bank provides funding for:

A. the developed nations in Europe and Asia.

311. (p. 564-565) Which of the following helps to provide for the smooth flow of money between nations?

C. World Bank

D. International Exchange Center

Nickels – Chapter 20 #311

312. (p. 565) During the late 1990s, the International Monetary Fund lent millions of dollars to Russia and several

Asian nations because:

A. their national banks had become the dominant financial institutions in the world economy.

313. (p. 564) Critics of the World Bank charge the organization with:

C. lending most of its money to poor nations.

D. a wide array of computer security violations.

314. (p. 563) When comparing a letter of credit and a banker’s acceptance for financing international business

transactions, a letter of credit:

D. provides financing directly between buyers and sellers in different countries. A banker’s acceptance provides

an arrangement in which a bank serves as a broker taking title to the goods.

315. (p. 563) __________ currently provides for regulating international banking and finance practices.

316. (p. 564-565) Which of the following institutions monitors the monetary policies of member nations to ensure a

global monetary system that works best for all nations?

D. the International Reserve Bank

317. (p. 564) Which of the following institutions primarily finances economic development projects in

less-developed countries?

D. the International Reserve Bank

318. (p. 563) H & Q Importers arranged to have a French winery ship a large quantity of fine wine to the United

States. The company authorized its bank to make full payment to the French winery if and when the wine

arrives at the H & Q warehouse in Boston. This arrangement represents a:

D. banker’s acceptance.

319. (p. 563) Alan works as a loan officer for a major U.S. commercial bank, specializing in international loans.

When considering loans to governments and businesses in other nations, Alan:

320. (p. 563) The Fed announces that it intends to implement policies to increase interest rates. Which of the

following correctly identifies the most likely result of higher U.S. interest rates?

D. The rate of inflation will increase.

321. (p. 565, Reaching Beyond Our Borders box) According to the “Reaching Beyond Our Borders” box in Chapter 20, the

head of the World Bank, Paul Wolfowitz plans to change the priorities of the World Bank to include:

D. providing checking accounts for people who live in less-developed countries.

322. Describe and compare the three major types of organizations that make up the U.S. banking system:

commercial banks, savings and loan associations, and credit unions.

323. Explain how the Fed regulates the supply of money.

324. Compare and contrast the functions of the World Bank and the International Monetary Fund.

325. Identify and discuss the tools of an electronic funds transfer system (EFTS).

326. (p. 554) During Redd’s time as head of the Bank of Homewood, the bank paid interest on savings accounts

but not on checking accounts. Under Patty’s leadership, the bank now offers an interest-bearing account with

limited checking privileges as long as the depositor maintains a minimum balance. This type of account is

known as a:

D. composite account.

327. (p. 559) Since the Great Depression, the Bank of Homewood has been a member of the FDIC. This

membership means that the:

A. Bank of Homewood is a member of a consortium of banks that can pool funds to make loans too big for any

single bank to finance.

328. (p. 561) Patty worries about the tremendous amount of paperwork involved in supporting the bank’s

operations. She would like to encourage customers to use a system that would transfer money from one account

to another without requiring paperwork. Patty favors a(n):

D. limited documentation checking program.

329. (p. 551) The Bank of Homewood would like to offer more loans to customers, but it is low on available funds.

Patty is thinking about borrowing funds from the Fed. If the Bank of Homewood does acquire funds from the

Fed it will:

A. have to pledge some of its securities as collateral, because the Fed does not make unsecured loans.

330. (p. 563) Several businesses have approached the Bank of Homewood in the past year seeking assistance with

international business transactions. Which of the following services provided by the bank would help

companies conduct international business?

D. trade exchange letters

c20 Summary