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Business: A Changing World, 4/e
O.C. Ferrell, Colorado State University
Geoffrey Hirt, DePaul University
Money and the Financial System
True or False Quiz
Please answer all questions.
1
Credit cards allow little flexibility in paying off purchases.
A)
True
B)
False
2
The Federal Trade Commission regulates financial institutions.
A)
True
B)
False
3
There are several types of checking accounts.
A)
True
B)
False
4
Money has only two important functions: as a medium of exchange and a measure of value.
A)
True
B)
False
5
Money market accounts are savings accounts that guarantee a depositor a set interest rate over a specified interval of time as long as the funds are not withdrawn prematurely.
A)
True
B)
False
6
The FDIC insures individual bank accounts.
A)
True
B)
False
7
Commercial banks rely mainly on checking and savings accounts as their major source of funds.
A)
True
B)
False
8
When the Fed lowers the discount rate, it is harder to borrow money.
A)
True
B)
False
9
Nonbank financial institutions offer some financial services but do not accept deposits.
A)
True
B)
False
10
The Fed is an independent agency of the federal government.
A)
True
B)
False
11
Credit unions offer a variety of services, particularly commercial loans and checking accounts.
A)
True
B)
False
12
Certificates of deposit spread the risk of investing across many securities.
A)
True
B)
False
13
Automated clearinghouses (ACHs) permit payments such as deposits or withdrawals to be made to and from a bank account by magnetic computer tape.
A)
True
B)
False
14
When the Fed buys government securities, it increases the money in circulation.
A)
True
B)
False
15
Fiat money is not readily convertible to gold.
A)
True
B)
False
16
The most important characteristic of money is its divisibility.
A)
True
B)
False
17
A credit union is owned and controlled by its depositors.
A)
True
B)
False
18
The Fed is responsible for supervising the federal insurance funds that protect the deposits of member institutions.
A)
True
B)
False
19
Finance companies offer short-term loans at substantially higher rates of interest than banks.
A)
True
B)
False
20
Funds in a demand deposit can be withdrawn without an advance notice.
A)
True
B)
False
2002 McGraw-Hill Higher Education
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