Financial System and Institutions

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What is the primary purpose of the financial system?

To provide risk protection services
To create new jobs in the economy
To provide payment services
To encourage savings and transfer them to individuals and institutions needing credit (correct)

What is one of the outcomes of the financial system's process of encouraging savings and transforming them into investment spending?

A reduction in the economy's growth rate
A decrease in credit availability
A decrease in living standards
An increase in new job creation and a rise in living standards (correct)

Which of the following is NOT a supporting service provided by the financial system?

Risk protection services
Payment services
Liquidity services
Currency exchange services (correct)

What is the relationship between the financial system and economic growth?

The financial system promotes economic growth (D) Signup and view all the answers

What is the ultimate goal of the financial system's process of encouraging savings and transforming them into investment spending?

To promote economic growth and higher living standards (B) Signup and view all the answers

What is one of the ways the financial system supports individuals and institutions?

By providing risk protection services (B) Signup and view all the answers

What financial service do banks and their competitors offer to help consumers manage their money?

Managing Cash (B) Signup and view all the answers

What is an example of a type of loan that banks and their competitors offer to entrepreneurs?

Venture Capital Loans (B) Signup and view all the answers

Which of the following financial services is related to helping individuals plan for their future?

Selling and Managing Retirement Plans (D) Signup and view all the answers

What is an example of a type of financial product that banks and their competitors offer to investors?

Mutual Funds (D) Signup and view all the answers

What is an example of a type of risk management service that banks and their competitors offer?

Hedging Services (C) Signup and view all the answers

What is the term for a type of financial service that banks and their competitors offer to help businesses manage their equipment needs?

Equipment Leasing (C) Signup and view all the answers

What does the Financial Services Modernization Act of 1999 allow?

One-stop shopping for financial services (D) Signup and view all the answers

What is a challenge in the financial services industry today?

Differentiating banks from other financial-service providers (D) Signup and view all the answers

What service have banks offered for centuries?

Currency exchange (A) Signup and view all the answers

What is a service that banks and their competitors offer?

Discounting commercial notes (C) Signup and view all the answers

What is a service that banks have traditionally offered?

Checking accounts (demand deposits) (A) Signup and view all the answers

What is a service that banks offer to support government activities?

Credit value services (B) Signup and view all the answers

What is the primary focus of marketing in the banking industry?

Satisfying the needs of clients (C) Signup and view all the answers

Which of the following careers is NOT typically found in a financial firm?

Astronaut (B) Signup and view all the answers

What is a major trend affecting all financial-service firms?

Consolidation and geographic expansion (D) Signup and view all the answers

What is the role of a Credit Analyst?

To analyze creditworthiness of clients (C) Signup and view all the answers

What is another term for a Bank Examiner?

Bank Regulator (D) Signup and view all the answers

What is the main function of a Treasury Dealer?

To trade financial instruments (C) Signup and view all the answers

What is the current state of traditional banking?

Dying (D) Signup and view all the answers

Why are banks losing market share?

Because their largest customers have found ways to obtain funds without them (A) Signup and view all the answers

What is happening to the financial market share of banking?

It is decreasing (C) Signup and view all the answers

What is a characteristic of the financial-service providers in the U.S.?

They are all converging in terms of the services they offer (D) Signup and view all the answers

What is a type of financial institution that competes with banks?

All of the above (D) Signup and view all the answers

What is a factor that may be contributing to the decline of traditional banking?

Over-regulation (B) Signup and view all the answers