Banking Answers

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21
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The Federal Reserve manages the nation’s currency and money supply by

A
manipulating interest rates and acting as a lender to banks.
B
overseeing bank collections and payments on loans.
C
dictating criteria and setting loan terms for banks.
D
offering investment advice and adjusting interest rates.
22
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What types of investments do banks use to make a profit? Check all that apply.

A
opening checking accounts
B
starting new businesses
C
buying stocks and bonds
D
buying several properties
E
issuing loans to all customers
F
buying the rights to loans
23

How do central banks govern the banking industry? Select four options.

A
by deciding how much banks must keep in reserve
B
by overseeing the nation’s payment system
C
by supervising the loan process at banks
D
by printing money for distribution to banks
E
by responding quickly to banking crises that occur
F
by auditing banks based on current regulations
24

The Federal Reserve transfers profits from its twelve regional banks to

A
investment and commercial banks.
B
central banks in Europe and Asia.
C
the Department of Commerce.
D
the Department of the Treasury.
25

Banks pay interest to customers through a

A
savings account.
B
credit card account.
C
mortgage account.
D
401k account.
26

Which are the roles of a bank? Check all that apply.

A
Storing and holding money
B
Making purchases to create profits
C
Lending money
D
Investing in the economy
E
Creating money for the economy
27

What explains the difference between retail and commercial banking?

A
Commercial banks loan money to small businesses, while retail banks loan money to large corporations.
B
Retail banks loan money to small businesses, while commercial banks loan money to large corporations.
C
Commercial banks help small businesses make capital purchases, while retail banks help big businesses invest.
D
Retail banks help big businesses make capital purchases, while commercial banks help consumers invest.
28

Which banker would a software company most likely visit for help to raise large amounts of capital to acquire, or buy out another company?

A
a community banker
B
an investment banker
C
a commercial banker
D
an executive banker

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