Fact Pattern 19-1

question 1

Multiple Choice

Fact Pattern 19-1
Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair the car properly, issues a stop-payment order.
-Refer to Fact Pattern 19-1. Capital Bank

• A) is liable to Fix-It for the amount of the check.
• B) must stop payment if Capital has a reasonable time to act.
• C) need not stop payment unless Echo had a valid reason to act.
• D) need not follow Echo's order unless the check was certified.

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Definitions:

Monetary Policy

Monetary policy involves the management of a country's money supply and interest rates by the central bank to influence economic growth, inflation, and employment levels.

Liquidity-Preference Model

An economic model that suggests the demand for money is primarily determined by interest rates, reflecting preferences for cash liquidity.

Federal Reserve

The central banking system of the United States, responsible for monetary policy, regulating banks, and ensuring financial stability.

Money Supply

The aggregate sum of funds present in an economy at a given moment, encompassing cash, coins, and the amounts maintained in checking and savings accounts.