Question

6) Banks may use repurchase agreements to: _______.

A) pay their federal tax liabilities
B) underwrite consumer loans
C) borrow funds from financial intermediaries for liquidity D) hedge against price fluctuations on long-term bonds

10) Which of the following is NOT covered by federal deposit insurance? _______

A) checking accounts
B) CDs and time deposits C) savings accounts
D) money market funds

12) When a bank uses money from a checking account to make a loan, it has transformed: _______

A) a short-term liability to a borrower into a long-term asset to a saver B) one liability into another liability for the saver
C) a financial liability for a saver into a financial asset for a borrower D) a financial asset for a saver/investor into a liability for a borrower

23) The era of bank panics in the United States effectively ended: _______.

A) with the establishment of the Federal Reserve System in 1913 B) when dollars became convertible to gold
C) when hedging of currencies became popular
D) with the creation of the FDIC in 1934

Answer 1

6. Option C, borrow funds from financial intermediaries for liquidity

10. Option D, money market funds

12. Option D a financial asset for a saver/investor into a liability for a borrower

23. Option D, with the creation of the FDIC in 1934