class notes Flashcards
What is the Median Of Exchange?
The value of a dollar based on what we say is the value of money.
Define Barter.
Creating one good or service for another good or service.
What does it mean for money to be fungible?
Replaceable by another identical item; mutually interchangeable.
What is a demand deposit?
Type of bank account that allows depositor to take funds at any time for their immediate use
What are time deposit types?
An interest-bearing bank account where funds are locked in for a specific period, earning a fixed interest rate.
List two types of time deposits.
- Saving accounts
- Checking accounts
What is M1 in terms of money supply?
All money you can easily access that belongs to you.
What does M2 include?
Current account deposits and all the money you have outside of the bank. (All the money in M1 plus money that you can pretty easily access.)
What is M3?
Money that is less easily available to you, examples include selling stock or property.
What are interest rates?
The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.
What role does the Federal Reserve play?
The money from the federal reserve must be accepted by everybody.
What happened prior to the establishment of the Federal Reserve?
Each bank would issue its own currency/money.
What is the prime interest rate?
The lowest rate of interest at which money may be borrowed commercially. The prime interest rate is paid to the best customers, usually big businesses that are extremely creditworthy.
Define the discount rate.
The minimum interest rate set by the Federal Reserve for lending to other banks.
What is a Federal Reserve requirement?
The minimum percentage of deposits that a bank or thrift must hold in its vaults or on deposit with the Federal Reserve Bank.
Who is the chairman of the Federal Reserve?
The second most powerful person in the world after the president.
What does the US government do with money it prints?
Sells it to the Federal Reserve, which then issues it.
What organization issues coins in the US?
US Mint.
What are two responsibilities of the Federal Reserve?
- Lends money to banks
- Regulates commercial banks
What does the Federal Reserve do with physically damaged money?
Repairs it.
What acts is the Federal Reserve responsible for upholding?
Truth and lending acts.
What is a money center bank? Give an example.
Banks that operate worldwide, example: Wells Fargo.
What is a regional bank? Give an example.
Banks that operate in specific regions of the country, example: TD Bank.
What characterizes local banks?
Common in farming communities, in business to serve a local community.
