Chapter 14 – Money, Banking, and Financial Institutions
93. During the Financial Crisis of 2007-2008, Goldman Sachs, Morgan Stanley, and other
financial firms with heavy exposure to the mortgage-related problems rushed to become bank
holding companies in order to:
94. The following programs were part of the Fed’s “lender of last resort” efforts in response to
the Financial Crisis of 2007-2008, except:
95. Which of the following trends had been happening in the banking industry even before the
Financial Crisis of 2007-2008?
Chapter 14 – Money, Banking, and Financial Institutions
96. The consolidation in the financial industry into fewer and larger firms:
97. “Thrifts” refer to the following institutions, except:
98. The following financial institutions traditionally accept deposits from savers, except:
Chapter 14 – Money, Banking, and Financial Institutions
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99. Which of the following financial institutions pool deposits of customers and use the
money to buy a portfolio of stocks or bonds or both?
100. Which of the following was not one of the three largest U.S. banks in 2009?
101. The electronic-based payment that involves a loan is the:
Chapter 14 – Money, Banking, and Financial Institutions
102. The use of a credit card is most similar to:
103. The use of a debit card is most similar to:
104. The so-called stored-value cards include the following, except:
Chapter 14 – Money, Banking, and Financial Institutions
105. The so-called electronic money is used when one pays through:
106. One major advantage of credit cards used for transactions is that they:
107. Gift-cards that people give one another for special occasions and holidays are examples
of:
Chapter 14 – Money, Banking, and Financial Institutions
108. When you use money to purchase groceries, money is functioning as a store of value.
109. Money performs its function as a store of value very well, because it protects one against
the erosion of purchasing power from inflation.
110. With token money, the face value is greater than the intrinsic value.
111. The M1 money supply is composed of currency, checkable deposits, and savings
deposits.
112. Credit card balances are part of money supply M2.
113. In the United States, all money is essentially the debt of government, commercial banks,
and thrift institutions.
114. The currency owned in the vaults of commercial banks is included in the money supply
M1.
115. The value of money varies increases when the price level increases.
Chapter 14 – Money, Banking, and Financial Institutions
116. The value of money in the United States is based on the stock of gold and silver held by
the United States government.
117. The Federal Reserve System is independent of Congress and the President, and does not
have to follow all orders from either Congress or the President.
118. The Federal Open Market Committee (FOMC) regulates markets and enforces antitrust
laws to keep markets open and competitive.
119. The Federal Reserve System is the institution that issues the U.S. paper currency or
dollar bills.
Chapter 14 – Money, Banking, and Financial Institutions
120. The Federal Reserve System is a bankers’ bank, and thereby acts as a “lender of last
resort” to banks.
121. The general public can open deposit accounts at their district’s Federal Reserve Bank.
122. The Financial Crisis of 2007-2008 was triggered by problems in the dot.com sector of
the economy.
123. A few years prior to the Financial Crisis of 2007-2008, many people were getting
approved for mortgage loans even without proper documentation or credit checks.
Chapter 14 – Money, Banking, and Financial Institutions
124. Subprime mortgages, which played a central role in the Financial Crisis of 2007-2008,
had been strongly encouraged and supported by the government before the crisis.
125. The Great Recession was the main cause of the Financial Crisis of 2007-2008.
126. The bail-out money given to the car companies GM and Chrysler came from the Fed
acting in its role as “lender of last resort”.
127. The Fed traditionally can grant loans to commercial banks, but not to investments banks
and securities firms.
Chapter 14 – Money, Banking, and Financial Institutions
128. The Financial Crisis of 2007-2008 halted the consolidation in the U.S. financial industry
that had caused a declining number but increasing size of firms in the industry prior to the
crisis.
129. Insurance companies are a major category of financial institutions.
130. Debit card balances are part of money supply M1, but credit card balances are not.
131. Store gift cards and university meal cards are perfect examples of debit cards.
Chapter 14 – Money, Banking, and Financial Institutions
132. Using a debit card is like writing a check; the amount will be deducted from one’s
checking account.