Econ Chapter 14

Question 1

Privately owned, publicly controlled bank of the United States

Answer 1

Federal Reserve System (Fed)

Question 2

Money that has an alternative use as an economic good; gunpowder, flour, corn

Answer 2

Commodity Money

Question 3

Money or other substance generally accepted as payment for goods and services; one of the three functions of money

Answer 3

Medium of Exchange

Question 4

Fiat currency that must be accepted for payment by decree of government

Answer 4

Legal Tender

Question 5

Bank that can lend to other banks in times of need, a “bankers’ bank”

Answer 5

Central Bank

Question 6

Financial institutions cash, currency, and reserves not needed for reserve requirements; potential source of new loans

Answer 6

Excess Reserves

Question 7

The buying and selling of government securities in financial markets

Answer 7

Open Market Operations

Question 8

Best or lowest interest rate commercial banks charge their consumers

Answer 8

Prime Rate

Question 9

Money-less economy that relies on trade or barter

Answer 9

Barter Economy

Question 10

Money in the form of gold or silver coins

Answer 10

Specie

Question 11

The quality of money that allows purchasing power to be saved until needed

Answer 11

Store of Value

Question 12

Commercial bank chartered by the National Banking System

Answer 12

National Bank

Question 13

The percentage of every deposit a bank set aside as legal reserves

Answer 13

Reserve Requirement

Question 14

Short run changes in the cost and availability of credit in order to influence the general level of economic activity

Answer 14

Monetary Policy

Question 15

Interest rate that the Federal Reserve System charges on loans to the nation’s financial institutions

Answer 15

Discount Rate