Chapter 7 & 8

1. Chapter 7 & 8 Review Game

2. Question 1 – True or False • When you save, you trade spending now for the ability to spend in the future.

3. Answer • True

4. Question 2 – True or False • Money market accounts pay higher interest rates than regular savings accounts.

5. Answer • True

6. Question 3 – True or False • Almost all deposits are insured by a federal government agency.

7. Answer • True

8. Question 4 – True or False • Banks work to earn a profit by selling financial services.

9. Answer • True

10. Question 5 – True or False • When you receive a check, you must deposit all of it in your account.

11. Answer • False

12. Question 6 – True or False • Banks usually send reports of your checking account activity each month describing the activity on your account.

13. Answer • True

14. Question 7 – True or False • You should reconcile your bank account about once every six months.

15. Answer • False

16. Question 8 – True or False • It is good policy to record the transaction as soon as you write a check or make a deposit.

17. Answer • True

18. Question 9 • The FDIC insures bank deposits in most banks up to a maximum of ____. • a. $75,000 • b. $50,000 • c. $100,000 • d. none of the above

19. Answer • c. $100,000

20. Question 10 • Trading goods and services without using money is ____. • a. borrowing • b. bartering • c. depositing • d. none of the above

21. Answer • b. bartering

22. Question 11 • Having the bank deduct a certain amount from your checking account each month to pay a bill is a(n) ____. • a. automatic withdrawal • b. register • c. fee • d. none of the above

23. Answer • a. automatic withdrawal

24. Question 12 • A bank's own personal check signed by the bank's cashier is a ____. • a. money order • b. cashier's check • c. traveler's check • d. none of the above

25. Answer • b. cashier's check

26. Question 13 • The book in which a person keeps a record of the checks he or she has written and the deposits made is called a ____. • a. folder • b. check register • c. balance book • d. none of the above

27. Answer • b. check register

28. Question 14 • Which of the following are checks for which you pay in advance and, if they are lost or stolen, the company from whom you bought these checks will replace them? • a. canceled checks • b. outstanding checks • c. traveler's checks • d. none of the above

29. Answer • c. traveler's checks

30. Question 15 • Kirk recently opened his own checking account with a local bank. The first check he wrote was to BestBi Food Mart for groceries and miscellaneous items in the amount of $43.75. Since BestBi is the business to whom Kirk wrote the check, BestBi is considered to be the ____. • a. payer • b. drawer • c. payee • d. drawee

31. Answer • c. payee

32. Question 16 • Francesca opened a checking account at First Union Bank approximately one month ago. Throughout the month she wrote 25 various checks for which First Bank will charge her $.25 per check. This fee per check is known as a(n) ____. • a. service charge • b. maintenance fee • c. checking fee • d. debit fee

33. Answer • a. service charge

34. Question 17 • Taylor works as a real estate agent and is an extremely busy young woman. Her work days are filled with appointments with clients who are either selling or buying homes. Her schedule is highly unpredictable, making it almost impossible to go to her bank to conduct her banking business. What service can she arrange with her employer and her bank so that her paycheck is conveniently and automatically deposited into her account each pay period? • a. pay by phone • b. direct deposit • c. ATM deposit • d. online deposit

35. Answer • b. direct deposit

36. Question 18 • Each month Hope's bank sends her an envelope containing her bank statement and the checks that have cleared her checking account that particular month. Each of these checks have been stamped indicating that her bank has paid the check. What are these checks called? • a. reconciled • b. cleared • c. paid • d. canceled

37. Answer • d. canceled

38. Question 19 • Octavio travels extensively on business often traveling out of state. Because of his traveling and hectic schedule, he does not like to carry a large amount of cash with him nor does he want to carry his checkbook. What could he opt to use that would provide electronic access to his checking account to make payments at stores, restaurants, etc., by immediately transferring funds from his checking account into the store's account? • a. ATM machine • b. PIN • c. debit card • d. both A and B

39. Answer • c. debit card

40. Question 20 • Muong is about to graduate from high school. He plans to attend community college in the fall. To help him with some of his expenses, many of his relatives are giving him cash as a graduation present. His great aunt, however, gives him a check for $200. Since Muong does not yet have a checking account he will give the check to his mother, Fay, to cash. He turns the check over on the back, signs his name; immediately under his signature he writes, "Pay to the order of Fay Nguyen." This type of check is known as a(n) ____. • a. transfer check • b. third party check • c. endorsed check • d. certified check

41. Answer • b. third party check

42. Question 21 • Today is Yolanda's payday. She has decided to deposit her entire paycheck into her checking account. What will she need to provide the bank in order to complete this type of transaction? • a. endorsed check and deposit slip • b. identification • c. both A and B • d. PIN

43. Answer • a. endorsed check and deposit slip

44. Question 22 • Bryce is the Business Manager for a large dress-making company located in New York City. His company has just sold $125,000 worth of dresses and other ladies apparel to a company located in Hamburg, Germany. What type of banking arrangement can the German company make with its bank to immediately move $125,000 of its money into the New York company's bank in order to pay for the dresses? • a. traveler's checks • b. certified check • c. wire transfer • d. ATM transfer

45. Answer • c. wire transfer

46. Question 23 • Stuart has been confined to home for the past two months unable to attend regular classes at his high school. His economics teacher has asked him to research the advantages associated with banks and checking accounts. Which of the following is not an advantage? • banks are regulated and, therefore, provide security for money • there are no costs associated with banking services • banks can increase a consumer's purchasing power • money is better protected from robberies in a bank than in a person's home

47. Answer • b. there are no costs associated with banking services

48. Question 24 • A written promise to pay a debt by a specified date is called a ____. • a. yield • b. bond • c. bank deposit • d. none of the above

49. Answer • b. bond

50. Question 25 • If you deposit $200 in an account that pays 6 percent simple interest per year, which of the following would be the balance in your savings account at the end of the first year? • a. $210 • b. $250 • c. $212 • d. none of the above