Overview
Chapter 11
Banking Industry: Structure and Competition
11.1 Historical Development of the Banking System.
1) The modern commercial banking system began in America when the
A) Bank of United States was chartered in New York in 1801.
B) Bank of North America was chartered in Philadelphia in 1782.
C) Bank of United States was chartered in Philadelphia in 1801.
D) Bank of North America was chartered in New York in 1782.
2) A major controversy involving the banking industry in its early years was
A) whether banks should both accept deposits and make loans or whether these functions should be separated into different institutions.
B) whether the federal government or the states should charter banks.
C) what percent of deposits banks should hold as fractional reserves.
D) whether banks should be allowed to issue their own bank notes.
3) The government institution that has responsibility for the amount of money and credit supplied in the economy as a whole is the
A) central bank.
B) commercial bank.
C) bank of settlement.
D) monetary fund.
4) Because of the abuses by state banks and the clear need for a central bank to help the federal government raise funds during the War of 1812, Congress created the
A) Bank of United States in 1812.
B) Bank of North America in 1814.
C) Second Bank of the United States in 1816.
D) Second Bank of North America in 1815.
5) The Second Bank of the United States was denied a new charter by
A) President Andrew Jackson.
B) Vice President John Calhoun.
C) President Benjamin Harrison.
D) President John Q. Adams.
6) Currency circulated by banks that could be redeemed for gold was called
A) junk bonds.
B) banknotes.
C) gold bills.
D) state money.
7) To eliminate the abuses of the state-chartered banks, the ________ created a new banking system of federally chartered banks, supervised by the ________.
A) National Bank Act of 1863; Office of the Comptroller of the Currency
B) Federal Reserve Act of 1863; Office of the Comptroller of the Currency
C) National Bank Act of 1863; Office of Thrift Supervision
D) Federal Reserve Act of 1863; Office of Thrift Supervision
8) The belief that bank failures were regularly caused by fraud or the lack of sufficient bank capital explains, in part, the passage of
A) the National Bank Charter Amendments of 1918.
B) the Garn-St. Germain Act of 1982.
C) the National Bank Act of 1863.
D) Federal Reserve Act of 1913.
9) Before 1863
A) federally-chartered banks had regulatory advantages not granted to state-chartered banks.
B) the number of federally-chartered banks grew at a much faster rate than at any other time since the end of the Civil War.
C) banks acquired funds by issuing banknotes.
D) banks were required to maintain 100% of their deposits as reserves.
10) Prior to 1863, all commercial banks in the United States
A) were chartered by the U.S. Treasury Department.
B) were chartered by the banking commission of the state in which they operated.
C) were regulated by the Federal Reserve.
D) were regulated by the central bank.
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