Chapter 10 Flashcards

0
Q

Functions of banks

A
  1. Store money
  2. Save money
  3. Loans
  4. Safety Deposit Boxes
  5. Traveler’s checks and orders
  6. Credit cards
  7. Foreign Currency Exchange
  8. Investments and consulting
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1
Q

Banks

A

Financial institutions that accept demand deposits and make commercial loans

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2
Q

Commercial Banks

A

Focus more in business than individual banking

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3
Q

Money

A

Anything that serves as a medium o exchange, a unit of account, and a store of value.

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4
Q

Medium of exchange

A

Anything that is used to determine value during the exchange of goods and services

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5
Q

Barter

A

The direct exchange if one set of goods or services for another

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6
Q

Unit of account

A

A means of comparing the values of goods and services

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7
Q

Store of value

A

Something that keeps its value if it is stored rather than used

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8
Q

Currency

A

Coins and paper bills used as money

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9
Q

Commodity money

A

Objects that have value in themselves and that are also used as money

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10
Q

Representative money

A

Objects that have value because the holder can exchange them for something else of value

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11
Q

Fiat money

A

Money that has value because the government had ordered that it is an acceptable means to pay debts

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12
Q

National bank

A

A bank chartered or licensed by the national government

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13
Q

Bank run

A

Widespread panic in which great numbers of people try to redeem their paper money

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14
Q

Greenback

A

Paper currency issued during the Civil War

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15
Q

Gold Standard

A

A monetary system in which paper money and coins are equal to the value of a certain amount of gold

16
Q

Federal Reserve System

A

The nation’s central banking system

17
Q

Central bank

A

Bank that can lead to other banks in times of need

18
Q

Member bank

A

Banks that belongs to the Federal Reserve System

19
Q

Federal Reserve notes

A

The national currency we use today in the US

20
Q

Great Depression

A

The severe economic decline that began in 1929 and lasted for more than a decade

21
Q

4 C’s of Credit

A

Character
Capacity
Capital
Collateral

22
Q

Collateral

A

What you do have to surrender to a loan if you default.

What are you going to give up when you default

23
Q

Capital

A

Income plus savings and checking

24
Q

Capacity

A

How make you make

How long have you current job