Money and Banking

Question 1

Money

Answer 1

Anything that serves as a medium of exchange, a unit of account, and a store of value

Question 2

Medium of Exchange

Answer 2

Anything that is used to determine value during the exchange of goods and services

Question 3

Barter

Answer 3

The direct exchange on one set of goods or services for another

Question 4

Unit of Account

Answer 4

A means for comparing the values of goods and services

Question 5

Store of Value

Answer 5

Something that keeps its value if it is stored rather than used

Question 6

Currency

Answer 6

Coins and paper bills used as money

Question 7

Commodity Money

Answer 7

Objects that have value in themselves and that are also used as money

Question 8

Representative Money

Answer 8

Objects that have value because the holder can exchange them for something else of value

Question 9

Fiat Money

Answer 9

Money that has value because the government has ordered that it is an acceptable means to pay debt

Question 10

Bank

Answer 10

An institution for receiving, keeping, and lending money

Question 11

National Bank

Answer 11

A bank chartered, or licensed, by the national government

Question 12

Bank Run

Answer 12

Widespread panic in which great numbers of people try to redeem their paper money

Question 13

Greenback

Answer 13

Paper currency issued during the Civil War

Question 14

Gold Standard

Answer 14

A momentary system in which paper money and coins are equal to the value of a certain amount of gold

Question 15

Federal Reserve System

Answer 15

The nation’s central banking system

Question 16

Central Bank

Answer 16

Bank that can lend to other banks in times of needs

Question 17

Member Bank

Answer 17

Bank that belongs to the Federal Reserve System

Question 18

Federal Reserve Note

Answer 18

The national currency we use today in the United States

Question 19

Great Depression

Answer 19

The severe economic decline that began in 1929 and lasted for more than a decade

Question 20

Federal Deposit Insurance Corporation

Answer 20

The government agency that insures customer deposits if a bank fails

Question 21

Money Supply

Answer 21

All the money available in the United States economy

Question 22

Liquidity

Answer 22

The ability to be used as, or directly converted to, cash

Question 23

Demand Deposit

Answer 23

The money in checking accounts

Question 24

Money Market Mutual Fund

Answer 24

a fund that pools money from small savers to purchase short-term government and corporate securities

Question 25

Fractional Reserve Banking

Answer 25

A banking system that keeps only a fraction of funds on hand and lends out the remainder

Question 26

Default

Answer 26

Failure to pay back a loan

Question 27

Mortgage

Answer 27

A specific type of loan that is used to buy real estate

Question 28

Credit Card

Answer 28

A card entitling its holder to buy goods and services based on holder’s promise to pay for these goods and services

Question 29

Interest

Answer 29

The price paid for the use of borrowed money

Question 30

Principal

Answer 30

The amount of money barrowed

Question 31

Debit Card

Answer 31

A card used to withdraw money

Question 32

Creditor

Answer 32

Person or institution to whom money is owed