Question 1

Payroll debit cards

Accepted Answer

Payroll debit cards can be issued to people who do not have bank accounts and can be used to pay bills online or access cash from an ATM. They offer a convenient option for receiving and accessing funds without the need for a bank account.

Question 2

After Xavier and Alyssa deposited nearly $55,000 in a savings account at Bigbux Bank, the bank failed and filed for bankruptcy. Because the Bigbux was an FDIC member bank, Xavier and Alyssa

Accepted Answer

As an FDIC member bank, Bigbux Bank provides insurance coverage for depositors up to $250,000 for each depositor, per insured bank. Therefore, Xavier and Alyssa should be protected as their account is fully insured by the FDIC.

Question 3

Timothy has $42,000 in a savings account with the Jefferson Credit Union. While economic conditions have caused financial institutions to struggle, Timothy feels that his money is safe due to the fact that the credit union's accounts are protected by the

Accepted Answer

The National Credit Union Administration (NCUA) is the government agency responsible for regulating and insuring credit unions, similar to how the Federal Deposit Insurance Corporation (FDIC) insures banks. Therefore, Timothy's money is protected by the NCUA, making option D the correct choice. Option A is incorrect because the FDIC only insures deposits at banks, not credit unions. Option B is incorrect because the Credit Union Insurance Fund (CUIF) does not exist. Option C is incorrect because the National Alliance of Credit Union Underwriters (NACUU) is not a government agency responsible for regulating and insuring credit unions.

Question 4

As is common payroll procedure for most employers, Penelope's company ________ her paycheck semimonthly into her checking account. This is a paperless process and no check is issued to the employee. By logging into her personnel system, Penelope has record of the net pay that was deposited into her personal checking account and an account of how much was taken out for taxes, Medicare, social security (FICA), and other deductions. Penelope's company has adopted an efficient ________ system.

Accepted Answer

The passage clearly mentions that Penelope's company deposits her paycheck through a paperless process called direct deposit into her checking account. The process involves no issuance of checks and the money gets transferred electronically into the employee's account. This system is known as an electronic funds transfer, making option C the correct choice. Option A mentions 'enterprise funds transfer', which is not a commonly known term and thus cannot be chosen as the correct answer. Option B mentions 'debit', which is only a part of the process and not the complete term. Option D mentions 'smart card', which is not connected to the process mentioned in the passage.

Question 5

Ricardo has an authorized work permit issued by the U.S. government to work in the U.S. Each day, he travels from Mexico to El Paso, TX, to work in the construction trade. At the time that he was first employed, his U.S. employer issued him a(n) ________. Each week, the employer scans his work stipend onto it. Ricardo can purchase with it, access cash through an ATM with it, and transfer funds with it. The risk for Ricardo is ________.

Accepted Answer

The payroll debit card serves as a credit card, so if it is stolen and successfully used for purchases, Ricardo has no recourse and is simply out the money. This is the biggest risk for him compared to the other options.

Question 6

For banks, check-processing activities

Accepted Answer

The answer of For banks, check-processing activities
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Question 7

The purpose of creating the FDIC was to

Accepted Answer

The purpose of creating the FDIC was to restore confidence in banking institutions by providing federally guaranteed insurance to depositors in case of bank failures. This would prevent people from losing their life savings in the event of a bank failure, which would help restore confidence in the banking system.

Question 8

Which of the following explains why online banks often offer their customers better interest rates than traditional banks?

Accepted Answer

Online banks have lower overhead costs because they do not have physical branches to maintain, which allows them to offer better interest rates to their customers.

Question 9

Banks prefer that customers use an electronic funds transfer system rather than traditional methods of payment because

Accepted Answer

Electronic funds transfer is more efficient and less expensive for banks than traditional check-based payments. It reduces the costs associated with processing and handling paper checks, such as printing, mailing, and manual entry. Therefore, banks encourage customers to use electronic funds transfer systems to save on costs and improve their own efficiency.

Question 10

The ________ provides the same results as a check because it withdraws funds from a checking account.

Accepted Answer

A debit card withdraws funds directly from a checking account, just like a check.

Question 11

Roberto deposited $66,000 in various individual accounts at his local credit union. He and his wife also have a joint savings account worth $54,700. What portion of these deposits is insured?

Accepted Answer

The National Credit Union Administration (NCUA) insures deposits in individual accounts up to $250,000 and joint accounts up to $250,000 per co-owner. Therefore, the insured portion of Roberto's deposits would be $66,000 + $54,700 = $120,700.

Question 12

Brendan travels extensively for his company. He stays at hotels that provide him with a(n) ________ that is imbedded with his personal information as well as a code to unlock his hotel room.

Accepted Answer

A smart card is a type of plastic card that contains a microprocessor chip that can be programmed with data, including personal information and security codes. This makes it an ideal choice for hotels to use as a keycard for their guests. RFID tags are also commonly used for this purpose, but they do not contain the same level of programming capabilities as a smart card. Credit cards and automatic keys are not typically used as hotel room keycards.

Question 13

Which of the following can include an embedded RFID chip that allows the holder to access secure areas in buildings or buy gas with the swipe of a card?

Accepted Answer

Smart cards can include an embedded RFID chip that allows the holder to access secure areas in buildings or buy gas with the swipe of a card. Direct deposit cards, e-cards, and check conversion cards do not typically have this feature.

Question 14

The Federal Deposit Insurance Corporation (FDIC) operates as a(n)

Accepted Answer

The FDIC is an independent agency of the U.S. government and provides insurance to banks to protect depositors in case of bank failures. The other choices are inaccurate.

Question 15

Enrico banks at a commercial bank that advertises its membership in the FDIC. This means that

Accepted Answer

Enrico's money is insured by an independent agency of the federal government called the Federal Deposit Insurance Corporation (FDIC). This means that if the bank were to fail, Enrico's deposits would be insured up to the maximum amount allowed by law, which is currently $250,000 per depositor per insured bank.

Question 16

Which of the following is a major difference between Internet banks and traditional banks?

Accepted Answer

Online banks have lower overhead costs because they do not have physical branches to maintain. This often translates to higher interest rates on deposits and lower fees for services.

Question 17

When a customer purchases an item with a debit card,

Accepted Answer

When a customer purchases an item with a debit card, the funds are automatically transferred from the customer's account to the store's account. There is no short-term loan involved and no bill sent through an electronic clearinghouse. While there are similarities between debit and credit cards, the transactions are not necessarily duplicates of each other.

Question 18

On payday, employers can designate their banks to electronically transfer funds from the business's checking account to the employees' checking account. This represents an example of a(n)

Accepted Answer

Direct deposit is a process where employers electronically transfer funds directly into their employees' bank accounts on payday. This is a popular and efficient method of paying employees, as it eliminates the need for paper checks and employees can access their funds immediately.

Question 19

________ replace the typical magnetic strip on a credit or debit card with a microprocessor.

Accepted Answer

Smart cards are designed to replace the magnetic strip on a credit or debit card with a microprocessor that can securely store and encrypt personal data. This technology offers greater protection against fraud and allows for additional security features, such as requiring a PIN or biometric authentication for transactions.

Question 20

A(n) ________ allows money to be exchanged electronically more quickly and more economically than with paper checks.

Accepted Answer

Electronic funds transfer systems (EFT) allow for electronic exchange of money between accounts, without the need for paper checks. This results in faster and more economical transactions. Option A (electronic check conversion) is a process where a paper check is converted into an electronic transaction, but it still involves a paper check. Options C (virtual banking operation) and D (telechecking system) are not commonly used terms for electronic money transfers.

Quiz 20: Money, Financial Institutions, and the Federal Reserve