Question

1.The government heavily regulates the financial system by

A.

encouraging financial intermediaries to implement new financial tools without supervision.

B.

decreasing information available to investors.

C.

insuring the soundness of the financial system.

D.

allowing the financial intermediaries to determine the amount and type of assets they want to hold.

2. Prior to​ 1986, Regulation Q gave the Federal Reserve the power to

A.

limit competition between banks by restricting interstate branching.

B.

increase competition among banks by expanding entry into the banking industry.

C.

limit competition between banks by placing a ceiling on the interest rates banks could pay on savings deposits.

D.

increase competition among banks by imposing stringent reporting requirement for disclosure of information to the public.

Answer 1

1) C). insuring the soundness of the financial system.

A financial system is a network of financial institutions, financial markets, financial instruments, and financial services that facilitate money transfer. This system includes end-users of saver, arbitrator, device, and money. The level of economic development depends largely on the basis and it facilitates the economy of the prevailing financial system. Proper circulation of funds is necessary for the economic development of the country.

2). C). limit competition between banks by placing a ceiling on the interest rates banks could pay on savings deposits.

The Federal Reserve Board on Thursday announced the approval of a final rule to repeal its Regulation Q, which prohibits the payment of interest on demand deposits by institutions that are member banks of the Federal Reserve System.