Final MGMT 1035: Week 9 Flashcards
Global Finance
What is money?
Any generally accepted medium of exchange which enables a society to trade goods without the need for barter; any objects or tokens regarded as a store of value and used as a medium of exchanges
Forms of Money?
o Coins: valued for metal content or representative tokens
o Paper Money: issued to represent values, from ancient China to modern societies
o digital currency: exchanged as information, rather than physical money
All of these work on with shared consensus of value.
Three kinds of money?
commodity, token, fiat
Commodity
gold and silver coins, but also things like shell, grain to other agreed items of value
Token
coins or paper that can be exchanged for the face value of gold or silver “gold standard”
Fiat Money?
money issued by the government
not backed by gold or another commodity but rather by declaration of the issuing government
The Big Mac Index illustrates…
Purchasing-Power Parity
The U.S. Federal Reserve was created in response to what crisis?
The 1907 financial Crisis.
The Treaty which created the clear rules for the creation of a common European currency was…
The Maastricht Treaty
When it was created in 1694 the purpose of the Bank of England was to…
Raise money for the Navy
Potosi is situated in which country?
Bolivia
Globally, the most popular form of exchange rate is…
Managed Floating
The Canadian dollar is an example of…
Fiat money
The style of bank system in Canada is best decribed as…
branch banking
Actual Euro notes and coins began to be distributed in…
2002
What was the first city of capitalism?
Potosi
for it supplied the primary ingredient of capitalism: money
What changed the nature of trade with China and other parts of Asia and drove Europe to seek their own colonial opportunities?
Spanish silver
the birth of global economics and trade
What was the global economic impact of gold and silver from South and Central America?
The influx of gold and silver changed global economies, transitioning Europe to a cash-based system. This shift facilitated the development of capitalism focused on monetary exchange rather than barter.
What country’s the world’s leading sources of lithium?
Potosi, Bolivia
(influence on capitalism)
What was the first central bank?
Bank of England, the model for most Central Banks, was formed in 1694
Why was the Bank of England formed?
Designed to raise money for the government to finance a navy
What is the US central bank?
Federal Reserve created, 1913
What is the role of the Federal Reserve?
- Maximize employment
- Stabilize Prices
- Moderate Long-term interest rates
(Regulate banks and supervised, approved financial mergers, and stabilized the financial system)
Why was the Federal Reserve created?
response to financial cries of 1907 and a desire to ease ups and down in the economy