Economics

Experts predict that the future structure of the U.S. banking industry will have

Experts predict that the future structure of the U.S. banking industry will have

Experts predict that the future structure of the U.S. banking industry will have
A) a few hundred banks.
B) as few as ten banks.
C) several thousand banks.
D) an increased number of banks.

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Meela

Although it has a population about half that of the United States, Japan has

Although it has a population about half that of the United States, Japan has

Although it has a population about half that of the United States, Japan has
A) more than 5000 commercial banks.
B) fewer than 100 commercial banks.
C) many more banks.
D) about 25 percent of the number of banks.

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Meela

The legislation that overturned the prohibition on interstate banking is

The legislation that overturned the prohibition on interstate banking is

The legislation that overturned the prohibition on interstate banking is
A) the Riegle-Neal Act.
B) the Gramm-Leach-Bliley Act.
C) the Glass-Steagall Act.
D) the McFadden Act.

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Meela

The business term for economies of scope is

The business term for economies of scope is

The business term for economies of scope is
A) synergies.
B) diversification.
C) cooperation.
D) economies of scale.

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Meela

The primary reason for the recent reduction in the number of banks is

The primary reason for the recent reduction in the number of banks is

The primary reason for the recent reduction in the number of banks is
A) bank consolidation.
B) bank failures.
C) restrictions on interstate branching.
D) re-regulation of banking.

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Meela

What financial innovations helped banks to get around the bank branching restrictions of the McFadde

What financial innovations helped banks to get around the bank branching restrictions of the McFadde

What financial innovations helped banks to get around the bank branching restrictions of the McFadden Act?

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Meela

Why did the interest rate volatility of the 1970s spur financial innovation?

Why did the interest rate volatility of the 1970s spur financial innovation?

Why did the interest rate volatility of the 1970s spur financial innovation?

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Meela

The most important developments that reduced banks cost advantages include

The most important developments that reduced banks cost advantages include

The most important developments that reduced banks cost advantages include
A) the growth of securitization.
B) the growth of the junk bond market.
C) the competition from money market mutual funds.
D) the growth in the commercial

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Meela

Sweep accounts which were created to avoid reserve requirements became possible because of a change

Sweep accounts which were created to avoid reserve requirements became possible because of a change

Sweep accounts which were created to avoid reserve requirements became possible because of a change in
A) technology.
B) government rules.
C) bank mergers.
D) deposit ceilings.

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Meela

In this type of arrangement, any balances above a certain amount in a corporation's checking account

In this type of arrangement, any balances above a certain amount in a corporation's checking account

In this type of arrangement, any balances above a certain amount in a corporation's checking account at the end of the business day are "removed" and invested in overnight securities that pay the corporation interest. This innovation i

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Meela

The process in which people seeking higher yielding securities take their funds out of the banking s

The process in which people seeking higher yielding securities take their funds out of the banking s

The process in which people seeking higher yielding securities take their funds out of the banking system thus restricting the amount of funds banks can lend is called
A) disintermediation.
B) deposit jumping.
C) capital mobility.

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Meela

Prior to 1980, the Fed set an interest rate ________, a maximum limit, on the interest rate that cou

Prior to 1980, the Fed set an interest rate ________, a maximum limit, on the interest rate that cou

Prior to 1980, the Fed set an interest rate ________, a maximum limit, on the interest rate that could be paid on time deposits.
A) window
B) wall
C) ceiling
D) floor

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Meela

Prior to 2008, the bank's cost of holding reserves equaled

Prior to 2008, the bank's cost of holding reserves equaled

Prior to 2008, the bank's cost of holding reserves equaled
A) the interest paid on deposits times the amount of deposits.
B) the interest earned on loans times the amount on reserves.
C) the interest paid on deposits times the amo

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Meela

Loophole mining refers to financial innovation designed to

Loophole mining refers to financial innovation designed to

Loophole mining refers to financial innovation designed to
A) conceal transactions from the SEC.
B) get around regulations.
C) conceal transactions from the Treasury Department.
D) hide transactions from the IRS.

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Meela

Because of securitization, a new class of residential mortgages offered to borrowers with less-than-

Because of securitization, a new class of residential mortgages offered to borrowers with less-than-

Because of securitization, a new class of residential mortgages offered to borrowers with less-than-stellar credit records developed. These mortgages are known as
A) adjustable-rate mortgages.
B) subprime mortgages.
C) risk-enhanced m

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Meela

Which of the following is NOT part of the shadow banking system?

Which of the following is NOT part of the shadow banking system?

Which of the following is NOT part of the shadow banking system?
A) the distributor
B) the servicer
C) the bundler
D) the transformer

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Meela

Securitization is a process of asset transformation that involves a number of different financial in

Securitization is a process of asset transformation that involves a number of different financial in

Securitization is a process of asset transformation that involves a number of different financial institutions working together. These financial institutions are known collectively as the
A) movers and shakers.
B) amalgamation.
C) tran

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Meela

The driving force behind the securitization of mortgages and automobile loans has been

The driving force behind the securitization of mortgages and automobile loans has been

The driving force behind the securitization of mortgages and automobile loans has been
A) the improvement in information technology.
B) the relaxation of regulatory restrictions on credit card operations.
C) the rising regulatory const

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Meela

One factor contributing to the rapid growth of the commercial paper market since 1970 is

One factor contributing to the rapid growth of the commercial paper market since 1970 is

One factor contributing to the rapid growth of the commercial paper market since 1970 is
A) improved information technology making it easier to screen credit risks.
B) FDIC insurance for commercial paper.
C) the fact that commercial p

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Meela

Adjustable rate mortgages (Multiple Choice Question)

Adjustable rate mortgages (Multiple Choice Question)

Adjustable rate mortgages
A) allow borrowers to avoid paying interest on portions of their mortgage loans.
B) reduce the interest-rate risk for financial institutions.
C) generally have higher initial interest rates than conventional f

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Meela

Adjustable rate mortgages (Multiple Choice Question)

Adjustable rate mortgages (Multiple Choice Question)

Adjustable rate mortgages
A) generally have higher initial interest rates than on conventional fixed-rate mortgages.
B) keep financial institutions' earnings high even when interest rates are falling.
C) benefit homeowners when in

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Meela

State banks that are not members of the Federal Reserve System are most likely to be examined by the

State banks that are not members of the Federal Reserve System are most likely to be examined by the

State banks that are not members of the Federal Reserve System are most likely to be examined by the
A) Comptroller of the Currency.
B) FHLBS.
C) FDIC.
D) Federal Reserve System.

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Meela

The Federal Reserve Act of 1913 required all ________ banks to become members of the Federal Reserve

The Federal Reserve Act of 1913 required all ________ banks to become members of the Federal Reserve

The Federal Reserve Act of 1913 required all ________ banks to become members of the Federal Reserve System, while ________ banks could choose to become members of the system.
A) state; national
B) state; municipal
C) national; municip

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Meela

The U.S. banking system is considered to be a dual system because

The U.S. banking system is considered to be a dual system because

The U.S. banking system is considered to be a dual system because
A) it actually includes both banks and thrift institutions.
B) it was established before the Civil War, requiring separate regulatory bodies for the North and South.
C)

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Meela

Today the United States has a dual banking system in which banks supervised by the ________ and by t

Today the United States has a dual banking system in which banks supervised by the ________ and by t

Today the United States has a dual banking system in which banks supervised by the ________ and by the ________ operate side by side.
A) municipalities; states
B) federal government; municipalities
C) federal government; states
D)

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Meela

The regulatory system that has evolved in the United States whereby banks are regulated at the state

The regulatory system that has evolved in the United States whereby banks are regulated at the state

The regulatory system that has evolved in the United States whereby banks are regulated at the state level, the national level, or both, is known as a
A) tiered regulatory system.
B) two-tiered regulatory system.
C) dual banking system

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Meela

Which regulatory body charters national banks?

Which regulatory body charters national banks?

Which regulatory body charters national banks?
A) the U.S. Treasury
B) the Federal Reserve
C) the FDIC
D) the Comptroller of the Currency

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Meela

The National Bank Act of 1863, and subsequent amendments to it

The National Bank Act of 1863, and subsequent amendments to it

The National Bank Act of 1863, and subsequent amendments to it
A) established the Office of the Comptroller of the Currency.
B) created a banking system of state-chartered banks.
C) broadened the regulatory powers of the Federal Reserv

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Meela

Although the National Bank Act of 1863 was designed to eliminate state-chartered banks by imposing a

Although the National Bank Act of 1863 was designed to eliminate state-chartered banks by imposing a

Although the National Bank Act of 1863 was designed to eliminate state-chartered banks by imposing a prohibitive tax on banknotes, state banks were able to stay in business by
A) ignoring the regulations.
B) issuing credit cards.
C) ac

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Meela

Prior to 1863, all commercial banks in the United States

Prior to 1863, all commercial banks in the United States

Prior to 1863, all commercial banks in the United States
A) were chartered by the banking commission of the state in which they operated.
B) were chartered by the U.S. Treasury Department.
C) were regulated by the Federal Reserve.

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Meela

Before 1863 (Multiple Choice Question)

Before 1863 (Multiple Choice Question)

Before 1863
A) banks were required to maintain 100% of their deposits as reserves.
B) banks acquired funds by issuing banknotes.
C) federally-chartered banks had regulatory advantages not granted to state-chartered banks.
D) the n

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Meela

The belief that bank failures were regularly caused by fraud or the lack of sufficient bank capital

The belief that bank failures were regularly caused by fraud or the lack of sufficient bank capital

The belief that bank failures were regularly caused by fraud or the lack of sufficient bank capital explains, in part, the passage of
A) the National Bank Act of 1863.
B) Federal Reserve Act of 1913.
C) the National Bank Charter Amendm

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Meela

To eliminate the abuses of the state-chartered banks, the ________ created a new banking system of f

To eliminate the abuses of the state-chartered banks, the ________ created a new banking system of f

To eliminate the abuses of the state-chartered banks, the ________ created a new banking system of federally chartered banks, supervised by the ________.
A) Federal Reserve Act of 1863; Office of the Comptroller of the Currency
B) National

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Meela

Currency circulated by banks that could be redeemed for gold was called

Currency circulated by banks that could be redeemed for gold was called

Currency circulated by banks that could be redeemed for gold was called
A) gold bills.
B) state money.
C) banknotes.
D) junk bonds.

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Meela

The Second Bank of the United States was denied a new charter by

The Second Bank of the United States was denied a new charter by

The Second Bank of the United States was denied a new charter by
A) Vice President John Calhoun.
B) President John Q. Adams.
C) President Benjamin Harrison.
D) President Andrew Jackson.

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Meela

Because of the abuses by state banks and the clear need for a central bank to help the federal gover

Because of the abuses by state banks and the clear need for a central bank to help the federal gover

Because of the abuses by state banks and the clear need for a central bank to help the federal government raise funds during the War of 1812, Congress created the
A) Second Bank of the United States in 1816.
B) Second Bank of North America

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Meela

The government institution that has responsibility for the amount of money and credit supplied in th

The government institution that has responsibility for the amount of money and credit supplied in th

The government institution that has responsibility for the amount of money and credit supplied in the economy as a whole is the
A) monetary fund.
B) bank of settlement.
C) central bank.
D) commercial bank.

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Meela

A major controversy involving the banking industry in its early years was

A major controversy involving the banking industry in its early years was

A major controversy involving the banking industry in its early years was
A) whether banks should both accept deposits and make loans or whether these functions should be separated into different institutions.
B) whether banks should be all

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Meela

The modern commercial banking system began in America when the

The modern commercial banking system began in America when the

The modern commercial banking system began in America when the
A) Bank of United States was chartered in New York in 1801.
B) Bank of North America was chartered in Philadelphia in 1782.
C) Bank of North America was chartered in New Yo

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Meela

Banking crises have occurred throughout the world. What similarities do we find when we look at the

Banking crises have occurred throughout the world. What similarities do we find when we look at the

Banking crises have occurred throughout the world. What similarities do we find when we look at the different countries?

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Meela