Chapter 20: Money, Financial Institutions, and the Federal Reserve Flashcards

1
Q

banker’s acceptance

A

A promise that the bank will pay some specified amount at a particular time.

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2
Q

barter

A

The direct trading of goods or services for other goods or services.

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3
Q

certificate of deposit (CD)

A

A time-deposit (savings) account that earns interest to be delivered at the end of the certificate’s maturity date.

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4
Q

commercial bank

A

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.

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5
Q

credit unions

A

Nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members.

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6
Q

debit card

A

An electronic funds transfer tool that serves the same function as checks: it withdraws funds from a checking account.

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7
Q

demand deposit

A

The technical name for a checking account; the money in a demand deposit can be withdrawn anytime on demand from the depositor.

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8
Q

discount rate

A

The interest rate that the Fed charges for loans to member banks.

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9
Q

electronic funds transfer (EFT) system

A

A computerized system that electronically performs financial transactions such as making purchases, paying bills, and receiving paychecks.

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10
Q

Federal Deposit Insurance Corporation (FDIC)

A

An independent agency of the U.S. government that insures bank deposits.

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11
Q

International Monetary Fund (IMF)

A

Organization that assists the smooth flow of money among nations.

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12
Q

letter of credit

A

A promise by the bank to pay the seller a given amount if certain conditions are met.

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13
Q

M-1

A

Money that can be accessed quickly and easily (coins and paper money, checks, traveler’s checks, etc.).

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14
Q

M-2

A

Money included in M-1 plus money that may take a little more time to obtain (savings accounts, money market accounts, mutual funds, certificates of deposit, etc.).

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15
Q

M-3

A

M-2 plus big deposits like institutional money market funds.

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16
Q

money

A

Anything that people generally accept as payment for goods and services.

17
Q

money supply

A

The amount of money the Federal Reserve Bank makes available for people to buy goods and services.

18
Q

nonbanks

A

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).

19
Q

open-market operations

A

The buying and selling of U.S. government bonds by the Fed with the goal of regulating the money supply.

20
Q

pension funds

A

Amounts of money put aside by corporations, nonprofit organizations, or unions to cover part of the financial needs of members when they retire.

21
Q

reserve requirement

A

A percentage of commercial banks’ checking and savings accounts that must be physically kept in the bank.

22
Q

savings and loan association (S&L)

A

A financial institution that accepts both savings and checking deposits and provides home mortgage loans.

23
Q

Savings Association Insurance Fund (SAIF)

A

The part of the FDIC that insures holders of accounts in savings and loan associations.

24
Q

smart card

A

An electronic funds transfer tool that is a combination credit card, debit card, phone card, driver’s license card, and more.

25
Q

time deposit

A

The technical name for a savings account; the bank can require prior notice before the owner withdraws money from a time deposit.

26
Q

World Bank

A

The bank primarily responsible for financing economic development; also known as the International Bank for Reconstruction and Development.