Money and Banking Flashcards
1
Q
______ is anything that people will accept as payment for goods and services
A
Money
2
Q
money performs three important functions, name them
A
Medium of exchange, standard of value, and store value
3
Q
_______________ is a means through which goods and services can be exchanged
A
medium of exchange
4
Q
_______exchange of goods and service without using money
A
Bartering
5
Q
________ determines the economic worth in the exchange process
A
standard of value
6
Q
_______ is something that holds its value over time
A
store value
7
Q
one situation where money does not function well as a store value is when the economy experiences ______
A
inflation
8
Q
Physical properties of money:
A
durability, portability, divisibility, and uniformity
9
Q
economic properties:
A
Stability, scarcity, and acceptability
10
Q
money draws its value from three sources
A
Commodity money, Representative money, Fiat money
11
Q
_________money derives its value from the type of material from which it is composed
A
Commodity
12
Q
the most common form of commodity money throughout history has been coins made from _______
A
metal
13
Q
__________ money is paper money back by something tangible- gold silver- that gives it value
A
Representatives
14
Q
_________ money is declared by the government and accepted by citizens to have worth
A
Fiat
15
Q
the value of the U.S. dollar was linked to the value of _____ until 1971
A
gold
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
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
18
Q
_______ is the paper money and coins
A
currency
19
Q
checking accounts are called _______
A
demand deposits
20
Q
_________ are called so because funds in checking accounts can be converted into currency on demand
A
demand deposits
21
Q
_______ is a savings accounts, and time deposits that can be converted into cash relatively easily
A
Near money
22
Q
most demand deposits are _____________ accounts that can be converted into currency simply by writing a check
A
non interest-bearing
23
Q
travelers checks are also considered _________
A
demand deposit
24
Q
________ accounts, are interest-bearing savings accounts against which drafts may be written
A
negotiable order of withdrawal (NOW)
25
________, such as savings accounts and other interest bearing accounts, cannot be used directly to make transaction
Near money
26
_________ 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)
time deposits
27
____________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
money market accounts
28
economist use various instruments to measure the money supply, but the most often cited are _________
M1 & M2
29
M1 is the _____________ of the money supply, consisting of currency, demand deposits, and other checkable deposits
narrowest measure
30
the elements of _______are referred to as liquid assets, which means that they are or can easily become currency
m1
31
M2 is a __________of the money supply, consisting of m1 plus various kinds of near money
broader measure
32
a ________includes savings accounts, small- denomination time deposits, and money market mutual funds
M2
33
_________ arose in italy in the late middle ages
modern banking
34
___________ stored money or valuables for wealthy people and issued recipients that promised to return the property on demand
italian merchants
35
this was the beginning of fractional ___________
reserved banking
36
_________________ is the practice of holding only a fraction of the money deposited in a bank and lending the rest
fractional reserves banking
37
a __________ is a bank chartered by a state government
state bank
38
Alexander hamilton was the _________in 1789
secretary of treasury
39
________was a leading federalist who believed in a strong central government
Hamilton
40
hamilton argued that the constitution implied that the federal government had the authority to create a national bank to carry out its duty to
regulate currency
41
the first bank of the US was chartered in
1791
42
Congress finally agreed to charter the ________ bank of the US in 1816
second
43
president ________ was an outspoken critic who mistrusted banks with paper money
andrew jackson
44
during his period, all banks were state banks, each of which issued its own paper currency, called _________
bank notes
45
some of these banks were located in ____________ to discourage people from redeeming it
remote areas
46
it was this practice, along with the questionable quality of many bank notes, that resulted in the term________
Wildcat Bank
47
the governments first solution to this problem was to issue a new _______backed by government bonds
currency
48
these US bank notes were called
greenbacks
49
in 1863, congress passed the __________, which led to the creation of a system of national banks
National Banking Act
50
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
US treasury bonds
51
in 1990, the government officially adopted the _________
gold standard
52
the ________ is a system that backs the basic monetary unit with a set amount of gold
gold standard
53
In 1913, congress passed the ___________, which established the Federal Reserve System- a true central bank
Federal reserve act
54
the Fed consist of_______ regional bank with a central decision-making board
12
55
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
Fed
56
part of FDR’s new deal program was the _______
Banking act of 1933
57
the act instituted reforms such as regulating interest rates that banks could pay and prohibiting banks from _________
selling stock
58
the _______ provide federal insurance so that if a bank failed, people would no longer lose their money
Federal deposit insurance corporation
59
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
bank
60
the goal of a bank is to earn
profit
61
all financial institutions receive a _______ from the government, either state or federal
charter
62
________________are the oldest form of banking and are the financial institutions most commonly thought of as banks
privately owned commercial banks
63
__________ were initially established to provide loans to businesses
commerical banks
64
___________ bought and sold assets through the financial markets
investment banks
65
_________ provide a wide range of services, including checking, savings, loans, investment assistance, and credit cards to both businesses and individual consumers
commercial banks
66
____________ 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
deregulation
67
the ________ insures all commercial banks belong to the federal reserve system
FDIC
68
________________(S&Ls) began in the US in 1930s
Saving and loan associations
69
they were originally chartered by _________as mutual societies for two purposes- to take savings deposits and provide home mortgage loans
individual states
70
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
1933 and 1934
71
in 1989 the following saving and loan association crisis in the _____ was abolished and the FDIC took over
Federal savings and loan insurance corporation
72
many savings institutions _____ through the scale of stock just as commercial banks do
raise
73
the idea for _____ began in europe in the mid 1800s
credit unions
74
the first credit union in the us began in 1909 as _________ institutions
state chartered
75
the ____________ of 1934 created a system of federally chartered credit union
federal Union Act
76
most credit card unions have deposit insurance through the ________and organization similar to the FDIC
National credit union association
77
the major difference between credit unions and other financial institutions is that credit unions have ___________
membership requirements
78
____ are places where money can be bought and sold
banks
79
by using these services, customers are able to do these things:
store money, earn money, and borrow money
80
you can store important papers and valuables through the use of a ________
a safe deposit box
81
what is a common loan a bank makes?
mortgages
82
who agrees on the time period and interest rate of a loan
the lender and the borrower
83
in this arrangement the _________ acts as the collateral
real estate property
84
what happens if the borrower defaults?
the lender takes over the control of the property
85
_____ are issued by banks to users who are borrowers
credit cards
86
what happens if you don't pay back within a month?
you get extra intrest
87
the ____________ of 1933 tightly regulated the amount of interest that banks could pay on deposits and could charge on loans
Banking Act
88
_________ in the 1980s and 1990s ended these restrictions and brought major changes to the banking industry
Deregulation
89
______________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
The financial service act
90
this change allowed banks to sale ________ and ________
stock bonds and insurance
91
Real estate prices ballooned, in part because of ___________
lax lending standard
92
the banks and other financial companies would bundle the mortgages and sell them as ____________
Mortgage backed securities
93
a _____ is a contract a corporation issued that promises to repay borrowed money, plus interest , on a fixed schedule
bond
94
the easy profits encouraged banks to generate more mortgages by _______ their lending standards further, which drove house prices even ______
lowering higher
95
_________, particularly computer tech. has changed the way customers use banks, producing a system generally referred to as electronic bank
Technology
96
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
automated teller machines ATM
97
other innovation include ________ that can be used like an ATM card or a check
debit cards
98
a _____________ represents money that the holder has on a deposit with the issuer
stored-value card
99
______ are the oldest and most familiar of the developments in electronic banking
ATMs
100
in order to use one you must have a __________ for your ATM/debit card
PIN
101
Like ATM cards, ______ can be used at ATM machines to make transactions
debit cards
102
Debit cards are sometimes called ________
check cards
103
Check cards are sometimes called _________
prepaid cards
104
______________allows customers who have set up accounts with a bank to perform practically every transaction w/o setting foot in a bank
Electronic money
105
_____________ is a crime in which one person fraudulently uses another’s identity to obtain credit or to access financial accounts
identity theft
106
all the identity thief really needs is your ___________________
social security number
107
the best way to protect yourself from identity theft is to avoid letting other people see your _______________
finical information
108
________all bank statements, bills, or other documents that include account or social security numbers
shread
109
if you discover identity has been stolen follow these steps: list one.
contact each of the three major credit-reporting agencies to have a “fraud alert” placed on your account (experian, equifax, trans-union)
110
_______________is the measure of your dependability to repay loans
creditworthiness
111
__________ is a measure of your financial responsibility
character
112
_______________is a measure of the value of things a consumer owns that could be sold or cashed in to repay a loan
capacity
113
a persons records of paying bills and debts overtime is one's ______
credit history
