Chapters 14-15

Question 1

use of money as a yardstick for comparing the values of goods and services

Answer 1

unit of accounting

Question 2

12-member committee in the Federal Reserve System

Answer 2

Open market committee

Question 3

credit device used to make cashless purchases of goods and services

Answer 3

credit card

Question 4

includes all M1, plus such near moneys as money market mutual fund balances and Eurodollars

Answer 4

M2

Question 5

mediums of exchange such as cattle and gems that have value as a commodity

Answer 5

commodity money

Question 6

money deposited in a bank that can be withdrawn at any time

Answer 6

demand deposits

Question 7

interest rate the Fed charges on loans to banks

Answer 7

disocunt rate

Question 8

consists of money that can be spent immediately and against which checks can be written

Answer 8

M1

Question 9

money that has value because a government fiat has established it

Answer 9

fiat money

Question 10

rate of interest banks charge on loans to their best business customers

Answer 10

prime rate

Question 11

money that must by the law be accepted for payment of public and private debts

Answer 11

legal tender

Question 12

Federal Reserve System created by Congress in 1913

Answer 12

The Fed

Question 13

monetary policy that makes credit inexpensive and abundant

Answer 13

loose money policy

Question 14

exchange of goods and services for other goods and services

Answer 14

barter

Question 15

use of money in exchange for goods or services

Answer 15

medium of exchange

Question 16

manner in which a nation assigns value to its money

Answer 16

monetary standard

Question 17

policy that involves changing the rate of growth of the supply of money in circulation

Answer 17

monetary policy

Question 18

money deposited in a bank that can be withdrawn at any time by presenting a check

Answer 18

checkable deposits

Question 19

method by which a check that has been deposited in one depository institution

Answer 19

check clearing

Question 20

buying and selling of U.S. securities by the Fed to affect the money supply

Answer 20

open market operations

Question 21

checking account that allows a customer to write a check for more money than exists in the account

Answer 21

overdraft checking

Question 22

money not valuable in itself for non-money uses

Answer 22

representative money

Question 23

system in which only a fraction of the deposits in a bank is kept on hand

Answer 23

fractional reserve banking

Question 24

anything customarily used as a medium of exchange, unit of accounting, and a store of value

Answer 24

money

Question 25

use of money to store purchasing power for later use

Answer 25

store of value

Question 26

regulations set by the Fed requiring banks to keep a fraction of their money on deposit

Answer 26

reserve requirements

Question 27

monetary policy which makes credit expensive and in short supply in an effort to slow the economy

Answer 27

tight money policy

Question 28

mutual savings bank, savings and loan associations

Answer 28

thirft institutions

Question 29

assets, such as savings accounts, that can be turned into money

Answer 29

near money