Money and Banking

Question 1

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

Answer 1

Money

Question 2

______ is a sustained rise in the general level of prices

Answer 2

Inflation

Question 3

Money draws its value from 3 possible sources:

Answer 3

Commodity Money
Representative Money
Fiat Money

Question 4

A ________ is a means through which goods and services can be exchanged

Answer 4

medium of exchange

Question 5

Economic Properties:

Answer 5

Stability
Scarcity
Acceptability

Question 6

_______ is the exchange of goods and services without using money

Answer 6

Barter

Question 7

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

Answer 7

Commodity money

Question 8

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

Answer 8

Money market accounts

Question 9

______ is declared by the government and accepted by citizens to have worth

Answer 9

Fiat money

Question 10

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

Answer 10

Near money

Question 11

_____ is the narrowest measure of the money supply, consisting of currency, demand deposits, and other checkable deposits

Answer 11

M1

Question 12

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

Answer 12

Privately owned commercial banks

Question 13

Money performs 3 important functions:

Answer 13

medium of exchange
standard of value
store of value

Question 14

Modern banking arose in ____ in the late Middle Ages

Answer 14

Italy

Question 15

Physical Properties of Money:

Answer 15

Durability
Portability
Divisibility
Uniformity

Question 16

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

Answer 16

Fractional reserve banking

Question 17

The value of the US dollar was linked to the value of gold until _____

Answer 17

1971

Question 18

The_________created a system of federally chartered credit unions

Answer 18

Federal Credit Union Act of 1934

Question 19

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

Answer 19

bank

Question 20

________ is paper money backed by something tangible–gold or silver–that gives it value

Answer 20

Representative money

Question 21

A ________ determines the economic worth in the exchange process

Answer 21

standard of value

Question 22

________ was the Secretary of Treasury in 1789

Answer 22

Alexander Hamilton

Question 23

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

Answer 23

Time deposits

Question 24

Checking accounts are called ________

Answer 24

demand deposits

Question 25

The First Bank of the US was chartered in ____

Answer 25

1791

Question 26

During this period, all banks were state banks, each of which issued its own paper currency, called______

Answer 26

bank notes

Question 27

These US bank notes were called _______

Answer 27

greenbacks

Question 28

In___, the government officially adopted the gold standard

Answer 28

1900

Question 29

In 1913, Congress passed the _________which established the federal Reserve System-a true central bank

Answer 29

Federal Reserve Act

Question 30

The _______ instituted reforms such as regulating interest rates that banks could pay and prohibiting banks from selling stock

Answer 30

Banking Act of 1933

Question 31

The ____________ provided federal insurance so that if a bank failed, people would no longer lose their money

Answer 31

Federal Deposit Insurance Corporation

Question 32

A _______ is something that holds its value over time

Answer 32

store of value

Question 33

______ is paper money and coins

Answer 33

Currency