1. A bank fails when:

Select one:

a.it does not belong to the FDIC.

b.its assets are greater than its liabilities.

c.its assets can no longer cover its liabilities.

d.its net worth plus assets are greater than its liabilities.

2.Bank failures are usually the result of:

Select one:

a.population shifts away from banking centers.

b.loan losses combined with deposit withdrawals.

c.interest rate adjustments caused by the Federal Reserve.

d.regulators requiring banks to perform services that are unsuited to the banks' specialty areas.

3.Correspondent banking:

Select one:

a.is illegal in the United States.

b.is an interbank relationship involving deposits and various services.

c.refers to "bank-by-mail" services offered by many financial institutions.

d.means that when one financial institution's reserve account increases, another institution's reserve account must decrease.

4.Demand deposits and other checkable deposits:

Select one:

a.provide records of payment.

b.offer an element of safety if checks are lost or stolen.

c.are more convenient than currency for transacting large or complicated payments.

d.all of these answers are correct.

5.Each Federal Reserve Bank:

Select one:

a.cashes checks for individuals and businesses.

b.keeps a reserve account for every financial institution and major corporation in its district.

c.performs a variety of chores in its role as fiscal agent for the U.S. government.

d.records the name and amount of every check deposited or cashed within its district so that a master check file can be kept.