Chapter 20 Flashcards
The organization that is in charge of money
The Federal Reserve (Fed)
Anything that people generally accept as payment for goods and services.
Money
The direct trading of goods or services for other goods or services.
Barter
Five standards for money
Portability Divisibility Stability Durability Uniqueness
The amount of money the Federal Reserve Bank makes available for people to buy goods and services.
Money Supply
the amount of goods and services you can buy with dollar goes up or down
Rising dollar value and falling dollar value
A percentage of commercial banks’ checking and savings accounts that must be physically kept in the bank.
Reserve requirement
What are the three basic tools the Fed uses to manage money
Reserve requirement
Open market
Discount rate
The buying and selling of U.S. government bonds by the Fed with the goal of regulating the money supply.
Open-market operations
The interest rate that the Fed charges for loans to member banks.
Discount rate
Law that required to all federally chartered banks to join the Federal Reserve
Federal Reserve Act of 1913
Why was the Fed designed?
To prevent a run on banks repeat from 1907.
The most important move to protect the public from bank failures
Establish federal deposit insurance
The U.S. Banking system consists of
Commercial banks
savings and loan associations, and
credit unions
A profit-seeking organization that receives deposits from individuals and corporations in the form of checking and savings accounts and then uses some of these funds to make loans.
Commercial bank
The technical name for a checking account; the money can be withdrawn anytime on demand from the depositor.
Demand Deposit
The technical name for a savings account; the bank can require prior notice before the owner withdraws money from a time deposit.
Time Deposit
A time-deposit (savings) account that earns interest to be delivered at the end of the certificate’s maturity date.
Certificate of Deposit (CD)
A financial institution that accepts both savings and checking deposits and provides home mortgage loans
Savings and Loan association
Nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members.
Credit Unions
Financial organizations that accept no deposits but offer many of the services provided by regular banks (pension funds, insurance companies, commercial finance companies, consumer finance companies, and brokerage houses).
Nonbanks
Three organizations created to protect individuals money
Federal Deposit Insurance Corporation (FDIC)
Savings Association Insurance Fund (SAIF)
National Credit Union Administration (NCUA)
An independent agency of the U.S. government that insures bank deposits.
Federal Deposit Insurance Corporation (FDIC)
The part of the FDIC that insures holders of accounts in savings and loan associations.
Savings Association Insurance fund (SAIF)
Provides up to 250,000 coverage per individual depositor per institution
National Credit Union Administration (NCUA)
A computerized system that electronically performs financial transactions such as making purchases, paying bills, and receiving paychecks.
Electronic funds transfer system
An electronic funds transfer tool that serves the same function as checks: it withdraws funds from a checking account.
Debit card
An electronic funds transfer tool that is a combination credit card, debit card, phone card, driver’s license card, and more.
Smart card
A promise by the bank to pay the seller a given amount if certain conditions are met.
letter of credit
A promise that the bank will pay some specified amount at a particular time.
Bankers acceptance
The net result of international banking
to link the economies of the world into one interrelated system with no regulatory control.
The bank primarily responsible for financing economic development; also known as the International Bank for Reconstruction and Development.
World Bank
Organization that assists the smooth flow of money among nations.
International Monetary Fund (IMF)
