Chapter 16 sec. 2 quiz

What is check clearing?

• The idea that every one dollar of government spending creates more than one dollar in economic activity

• The use of government spending and revenue collection to influence the economy

• The process by which banks record whose account gives up money and whose account receives money when a customer writes a check

• Budget in which revenues are equal to spending

Which is NOT a factor that affects the amount of money that firms or individuals hold?

• interest rates

• unit of account

• general level of income

• price levels in the economy

The total assets minus the total liabilities is the...

• mutual fund

• par value

• discount rate

• net worth

What is a company that holds more than one bank?

• The board of governors

• A bank holding company

• NAFTA

• The treasury department

What is an example of how the Federal Reserve serves, specifically, the government?

• It processes payments such as social security checks and IRS funds

• They clear millions of checks at any one time

• They study proposed bank mergers and bank holding company charters to make sure there is competition in the bank and financial industries

• Acts as a lender of last resort, making emergency loans to commercial banks

What is the federal funds rate?

• A measure of the funds that are easily accessible or in circulation

• The rate at which money in the government increases

• The loss of funds for private investment due to government borrowing

• The interest rate banks charge each other for loans

Which of the following is NOT a way the federal reserve specifically serves the banks?

• Check-clearing

• It safeguards bank reserves and lends reserves to banks that need to borrow

• It sells, transfers, and redeems government bonds, bills, and notes, or securities

• Protects consumers by enforcing truth-in-lending laws

What happens to your check after the recipient presents it at his/her bank?

• A cashier's check is written

• It is sent to the Federal Reserve bank

• It is sent to the Department of Treasury

• It is sent to a bank holding company

The rate the Federal Reserve charges for loans to commercial banks is the...

• prime rate

• trade barrier

• stock split

• discount rate

Which is NOT a function of the Federal Reserve System?

• Manages the federal budget and provides economic data to congress

• Provides banking and fiscal services to the federal government

• Regulates the banking industry

• Provides banking services to member and nonmember banks