While Receiving a Properly Drawn and Payable Check on a Person's

question 24

Multiple Choice

While receiving a properly drawn and payable check on a person's account,which of the following circumstances make it a necessity for the bank to honor the check?

• A)When the check is stale.
• B)When there are sufficient funds in the account.
• C)When there is a stop payment order.
• D)When a postdated check is presented before the date of the check.

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Definitions:

Fed Funds Rate

The interest rate at which depository institutions lend reserve balances to other depository institutions overnight, a vital monetary policy tool used by the Federal Reserve.

Discount Rate

The rate at which the central bank lends money to commercial banks and other financial institutions through its discount window.

Open Market Operations

Open Market Operations involve the buying and selling of government securities by a central bank to control the money supply and interest rates in the economy.

Tight Monetary Policy

A central bank strategy aiming to slow economic growth by increasing interest rates and reducing the quantity of money in circulation.