Question 1

________________ is a process where merchants and utility companies take the information from a check an individual has just written,and electronically debit the individual's account instead of sending the check through the regular check clearing process.

Accepted Answer

The answer of ________________ is a process where merchants and...

Question 2

________________ CDs permit periodic upward adjustments in promised interest rates.

Accepted Answer

The answer of ________________ CDs permit periodic upward adjustments in...

Question 3

Domestic deposits generate legal reserves.

Accepted Answer

Domestic deposits are subject to reserve requirements imposed by the central bank. Banks are required to hold a certain percentage (reserve ratio) of their deposits as legal reserves with the central bank. These legal reserves constitute a part of the monetary base and are used by the central bank to conduct monetary policy. Therefore, domestic deposits do generate legal reserves.

Question 4

The volume of core deposits at U.S.banks has been growing in recent years relative to other categories of deposits.

Accepted Answer

The volume of core deposits at U.S. banks has been declining in recent years as customers shift towards other financial products and services.

Question 5

Legally imposed interest-rate ceilings on deposits were first set in place in the United States after passage of the Bank Holding Company Act.

Accepted Answer

Legally imposed interest-rate ceilings on deposits were first set in place in the United States with the passage of the Banking Act of 1933, also known as the Glass-Steagall Act, not the Bank Holding Company Act.

Question 6

Gradual phase-out of legal interest-rate ceilings on deposits offered by U.S.banks was first authorized by the Glass-Steagall Act.

Accepted Answer

The gradual phase-out of legal interest-rate ceilings on deposits offered by U.S. banks was authorized by the Depository Institutions Deregulation and Monetary Control Act of 1980, not the Glass-Steagall Act.

Question 7

Due to the fact that they may be perceived as more risky,________________ banks generally offer higher deposit rates than traditional brick and mortar banks.

Accepted Answer

The answer of Due to the fact that they may...

Question 8

The implicit interest rate on checkable deposits equals the difference between the cost of supplying deposit services to a customer and the amount of the service charge actually assessed to that customer.

Accepted Answer

The implicit interest rate on checkable deposits is calculated as the difference between the cost of providing deposit services and the service charges imposed, reflecting the value of services provided without explicit charges.

Question 9

The _______________,which was created under Tax Relief Act of 1997,allows individuals to make non-tax-deductible contributions to a retirement fund that can grow tax free and also pay no taxes on their investment earnings when withdrawn.

Accepted Answer

The answer of The _______________,which was created under Tax Relief...

Question 10

________________ CDs allow the depositor to withdraw some funds without a withdrawal penalty.

Accepted Answer

The answer of ________________ CDs allow the depositor to withdraw...

Question 11

On October 28,2004,________________ became law,permitting depository institutions to electronically transfer check images instead of the checks themselves.

Accepted Answer

The answer of On October 28,2004,________________ became law,permitting depository institutions...

Question 12

Demand deposits are among the most volatile and least predictable of a bank's sources of funds with the shortest potential maturity.

Accepted Answer

Demand deposits refer to deposits that can be withdrawn by the depositor at any time without prior notice. They are considered volatile and unpredictable because depositors can withdraw funds in large amounts or all at once, which can affect a bank's liquidity and ability to meet its obligations. Additionally, demand deposits have the shortest potential maturity as they can be withdrawn by the depositor on demand.

Question 13

Deposits held by banks with others are called correspondent deposits.

Accepted Answer

Correspondent deposits refer to deposits held by a bank with another bank, typically to facilitate transactions, settlements, or borrowing/lending activities.

Question 14

According to the textbook,the U.S.Treasury keeps most of its operating funds in TT&L deposits.

Accepted Answer

TT&L (Treasury Tax and Loan) deposits are used by the U.S. Treasury to manage its operating funds. These deposits are held by commercial banks and are used for daily transactions such as paying bills and processing payments.

Question 15

Excess legal reserves are the sources out of which new bank loans are created.

Accepted Answer

Excess reserves are the funds banks hold over the required minimum (reserve requirement set by the central bank). They can use these excess reserves to extend new loans, effectively creating new money in the process.

Question 16

__________ CDs allow depositors to switch to a higher interest rate if market interest rates rise.

Accepted Answer

The answer of __________ CDs allow depositors to switch to...

Question 17

________________ are accounts in domestic banking institutions where the U.S.Treasury keeps most of their operating funds.

Accepted Answer

The answer of ________________ are accounts in domestic banking institutions...

Question 18

The contention that there are certain banking services (such as small loans or savings and checking accounts)that every citizen should have access to is usually called socialized banking.

Accepted Answer

This concept is more accurately referred to as "financial inclusion," which aims to make financial services accessible at affordable costs to all individuals and businesses, especially the underserved and unbanked populations.

Question 19

For decades,depository institutions offered only one type of savings plan-____________.One that could be opened with as little as $5 and withdrawal privileges were unlimited.

Accepted Answer

The answer of For decades,depository institutions offered only one type...

Question 20

IRA and Keogh deposits have great appeal for bankers principally because they can be sold bearing relatively low (often below-market)interest rates.

Accepted Answer

The answer of IRA and Keogh deposits have great appeal...

Quiz 12: Managing and Pricing Deposit Services