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Money and Banking > Money and Banking > Flashcards

Money and Banking Flashcards

1
Q

______ is anything that people will accept as payment for goods and services

A

Money

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2
Q

money performs three important functions, name them

A

Medium of exchange, standard of value, and store value

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3
Q

_______________ is a means through which goods and services can be exchanged

A

medium of exchange

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4
Q

_______exchange of goods and service without using money

A

Bartering

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5
Q

________ determines the economic worth in the exchange process

A

standard of value

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6
Q

_______ is something that holds its value over time

A

store value

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7
Q

one situation where money does not function well as a store value is when the economy experiences ______

A

inflation

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8
Q

Physical properties of money:

A

durability, portability, divisibility, and uniformity

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9
Q

economic properties:

A

Stability, scarcity, and acceptability

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10
Q

money draws its value from three sources

A

Commodity money, Representative money, Fiat money

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11
Q

_________money derives its value from the type of material from which it is composed

A

Commodity

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12
Q

the most common form of commodity money throughout history has been coins made from _______

A

metal

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13
Q

__________ money is paper money back by something tangible- gold silver- that gives it value

A

Representatives

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14
Q

_________ money is declared by the government and accepted by citizens to have worth

A

Fiat

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15
Q

the value of the U.S. dollar was linked to the value of _____ until 1971

A

gold

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16
Q

in Fiat money, coins contain only a token amount of precious ____ that is worth far less than the face value of these coins

A

metal

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17
Q

a crucial role of the government is maintaining the value of fiat money is controlling its supply- in other words, maintaining _______

A

scarcity

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18
Q

_______ is the paper money and coins

A

currency

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19
Q

checking accounts are called _______

A

demand deposits

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20
Q

_________ are called so because funds in checking accounts can be converted into currency on demand

A

demand deposits

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21
Q

_______ is a savings accounts, and time deposits that can be converted into cash relatively easily

A

Near money

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22
Q

most demand deposits are _____________ accounts that can be converted into currency simply by writing a check

A

non interest-bearing

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23
Q

travelers checks are also considered _________

A

demand deposit

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24
Q

________ accounts, are interest-bearing savings accounts against which drafts may be written

A

negotiable order of withdrawal (NOW)

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25
Q

________, such as savings accounts and other interest bearing accounts, cannot be used directly to make transaction

A

Near money

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26
Q

_________ are funds that people place in a financial institution for as a specific period of time in return for for a higher interest rate which are often placed in a certificate of deposit (CD)

A

time deposits

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27
Q

____________place restrictions on the number of transactions you can make in a month and require you to maintain a certain balance in the account in order to receive a higher rate of interest

A

money market accounts

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28
Q

economist use various instruments to measure the money supply, but the most often cited are _________

A

M1 & M2

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29
Q

M1 is the _____________ of the money supply, consisting of currency, demand deposits, and other checkable deposits

A

narrowest measure

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30
Q

the elements of _______are referred to as liquid assets, which means that they are or can easily become currency

A

m1

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31
Q

M2 is a __________of the money supply, consisting of m1 plus various kinds of near money

A

broader measure

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32
Q

a ________includes savings accounts, small- denomination time deposits, and money market mutual funds

A

M2

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33
Q

_________ arose in italy in the late middle ages

A

modern banking

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34
Q

___________ stored money or valuables for wealthy people and issued recipients that promised to return the property on demand

A

italian merchants

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35
Q

this was the beginning of fractional ___________

A

reserved banking

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36
Q

_________________ is the practice of holding only a fraction of the money deposited in a bank and lending the rest

A

fractional reserves banking

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37
Q

a __________ is a bank chartered by a state government

A

state bank

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38
Q

Alexander hamilton was the _________in 1789

A

secretary of treasury

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39
Q

________was a leading federalist who believed in a strong central government

A

Hamilton

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40
Q

hamilton argued that the constitution implied that the federal government had the authority to create a national bank to carry out its duty to

A

regulate currency

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41
Q

the first bank of the US was chartered in

A

1791

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42
Q

Congress finally agreed to charter the ________ bank of the US in 1816

A

second

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43
Q

president ________ was an outspoken critic who mistrusted banks with paper money

A

andrew jackson

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44
Q

during his period, all banks were state banks, each of which issued its own paper currency, called _________

A

bank notes

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45
Q

some of these banks were located in ____________ to discourage people from redeeming it

A

remote areas

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46
Q

it was this practice, along with the questionable quality of many bank notes, that resulted in the term________

A

Wildcat Bank

47
Q

the governments first solution to this problem was to issue a new _______backed by government bonds

A

currency

48
Q

these US bank notes were called

A

greenbacks

49
Q

in 1863, congress passed the __________, which led to the creation of a system of national banks

A

National Banking Act

50
Q

the act provided for a national currency backed by________ and regulated the minimum amount of capital required for national banks as well as the amount of reserves necessary to back the currency

A

US treasury bonds

51
Q

in 1990, the government officially adopted the _________

A

gold standard

52
Q

the ________ is a system that backs the basic monetary unit with a set amount of gold

A

gold standard

53
Q

In 1913, congress passed the ___________, which established the Federal Reserve System- a true central bank

A

Federal reserve act

54
Q

the Fed consist of_______ regional bank with a central decision-making board

A

12

55
Q

the ___ provides financial services to the federal government, makes loans to banks that serve the public, issues federal reserve notes as the national currency, and regulates the money supply to ensure that money retains its purchasing power

A

Fed

56
Q

part of FDR’s new deal program was the _______

A

Banking act of 1933

57
Q

the act instituted reforms such as regulating interest rates that banks could pay and prohibiting banks from _________

A

selling stock

58
Q

the _______ provide federal insurance so that if a bank failed, people would no longer lose their money

A

Federal deposit insurance corporation

59
Q

the term ______is used to refer to almost any kind of financial institution that takes in deposits and makes loans, helping individuals, businesses, and governments to manage their money

A

bank

60
Q

the goal of a bank is to earn

A

profit

61
Q

all financial institutions receive a _______ from the government, either state or federal

A

charter

62
Q

________________are the oldest form of banking and are the financial institutions most commonly thought of as banks

A

privately owned commercial banks

63
Q

__________ were initially established to provide loans to businesses

A

commerical banks

64
Q

___________ bought and sold assets through the financial markets

A

investment banks

65
Q

_________ provide a wide range of services, including checking, savings, loans, investment assistance, and credit cards to both businesses and individual consumers

A

commercial banks

66
Q

____________ led to a wave of mergers and consolidations, reducing the numbers of commercial banks from over 12,000 in 1990 to about 7,500 in 2005

A

deregulation

67
Q

the ________ insures all commercial banks belong to the federal reserve system

A

FDIC

68
Q

________________(S&Ls) began in the US in 1930s

A

Saving and loan associations

69
Q

they were originally chartered by _________as mutual societies for two purposes- to take savings deposits and provide home mortgage loans

A

individual states

70
Q

In _YEAR___ the federal government began chartering saving and loan associations and in __YEAR__ the government established the federal saving and loan association insurance corporation

A

1933 and 1934

71
Q

in 1989 the following saving and loan association crisis in the _____ was abolished and the FDIC took over

A

Federal savings and loan insurance corporation

72
Q

many savings institutions _____ through the scale of stock just as commercial banks do

A

raise

73
Q

the idea for _____ began in europe in the mid 1800s

A

credit unions

74
Q

the first credit union in the us began in 1909 as _________ institutions

A

state chartered

75
Q

the ____________ of 1934 created a system of federally chartered credit union

A

federal Union Act

76
Q

most credit card unions have deposit insurance through the ________and organization similar to the FDIC

A

National credit union association

77
Q

the major difference between credit unions and other financial institutions is that credit unions have ___________

A

membership requirements

78
Q

____ are places where money can be bought and sold

A

banks

79
Q

by using these services, customers are able to do these things:

A

store money, earn money, and borrow money

80
Q

you can store important papers and valuables through the use of a ________

A

a safe deposit box

81
Q

what is a common loan a bank makes?

A

mortgages

82
Q

who agrees on the time period and interest rate of a loan

A

the lender and the borrower

83
Q

in this arrangement the _________ acts as the collateral

A

real estate property

84
Q

what happens if the borrower defaults?

A

the lender takes over the control of the property

85
Q

_____ are issued by banks to users who are borrowers

A

credit cards

86
Q

what happens if you don’t pay back within a month?

A

you get extra intrest

87
Q

the ____________ of 1933 tightly regulated the amount of interest that banks could pay on deposits and could charge on loans

A

Banking Act

88
Q

_________ in the 1980s and 1990s ended these restrictions and brought major changes to the banking industry

A

Deregulation

89
Q

______________of 1999 lifted the ,and restriction form the act of 1933 that has prevented banks, insurance companies, and investment companies from selling the same products and comparing with one another

A

The financial service act

90
Q

this change allowed banks to sale ________ and ________

A

stock bonds and insurance

91
Q

Real estate prices ballooned, in part because of ___________

A

lax lending standard

92
Q

the banks and other financial companies would bundle the mortgages and sell them as ____________

A

Mortgage backed securities

93
Q

a _____ is a contract a corporation issued that promises to repay borrowed money, plus interest , on a fixed schedule

A

bond

94
Q

the easy profits encouraged banks to generate more mortgages by _______ their lending standards further, which drove house prices even ______

A

lowering higher

95
Q

_________, particularly computer tech. has changed the way customers use banks, producing a system generally referred to as electronic bank

A

Technology

96
Q

Banks have begun using ________, devices that allow bank customers to make deposits, withdrawals, and transfers and check accounts balances at any time w/o seeing a bank officer

A

automated teller machines ATM

97
Q

other innovation include ________ that can be used like an ATM card or a check

A

debit cards

98
Q

a _____________ represents money that the holder has on a deposit with the issuer

A

stored-value card

99
Q

______ are the oldest and most familiar of the developments in electronic banking

A

ATMs

100
Q

in order to use one you must have a __________ for your ATM/debit card

A

PIN

101
Q

Like ATM cards, ______ can be used at ATM machines to make transactions

A

debit cards

102
Q

Debit cards are sometimes called ________

A

check cards

103
Q

Check cards are sometimes called _________

A

prepaid cards

104
Q

______________allows customers who have set up accounts with a bank to perform practically every transaction w/o setting foot in a bank

A

Electronic money

105
Q

_____________ is a crime in which one person fraudulently uses another’s identity to obtain credit or to access financial accounts

A

identity theft

106
Q

all the identity thief really needs is your ___________________

A

social security number

107
Q

the best way to protect yourself from identity theft is to avoid letting other people see your _______________

A

finical information

108
Q

________all bank statements, bills, or other documents that include account or social security numbers

A

shread

109
Q

if you discover identity has been stolen follow these steps: list one.

A

contact each of the three major credit-reporting agencies to have a “fraud alert” placed on your account (experian, equifax, trans-union)

110
Q

_______________is the measure of your dependability to repay loans

A

creditworthiness

111
Q

__________ is a measure of your financial responsibility

A

character

112
Q

_______________is a measure of the value of things a consumer owns that could be sold or cashed in to repay a loan

A

capacity

113
Q

a persons records of paying bills and debts overtime is one’s ______

A

credit history

Money and Banking (1 decks)

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