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Econ. > 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 perform three important functions:

A

medium of exchange
standard of value
store of 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

______ determines the economic worth in the exchange process

A

standard of value

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5
Q

______ is something that holds its value over time

A

store of value

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6
Q

______ is the exchange of goods and services without using money

A

barter

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7
Q

______ is a sustained rise in the general level of prices

A

inflation

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8
Q

Physical Properties of Money:

A

durability
portability
divisibility
uniformity

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9
Q

Economic Properties of Money;

A

stability of value
scarcity
acceptability

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10
Q

money draws its value from three possible sources:

A

commodity money
representative money
fiat money

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11
Q

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

A

commodity money

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12
Q

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

A

representative money

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13
Q

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

A

flat money

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14
Q

the value of the US dollar was linked to the value of gold until ______

A

1971

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15
Q

______ is paper money and coins

A

currency

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16
Q

checking accounts are called ______

A

demand deposits

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17
Q

______ is savings accounts and time deposits and can be converted into cash relatively easily

A

near money

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18
Q

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

A

negotiable order of withdrawal (NOW) accounts

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19
Q

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

A

time deposits

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20
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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21
Q

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

A

M1

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22
Q

the elements of M1 are referred to as ______, which means that they are or can easily become currency

A

liquid costs

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23
Q

_______ is a broader measure of the money supply, consisting of M1 plus various kinds of near money

A

M2

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24
Q

modern banking arose in ______ in the late Middle Ages

A

Italy

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25
Q

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

A

fractional reserve banking

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26
Q

______ is a bank chartered by a state government

A

state bank

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27
Q

Who was the Secretary of Treasury in 1789?

A

Alexander Hamilton

28
Q

Who was an outspoken critic who mistrusted banks with paper money?

A

President Andrew Jackson

29
Q

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

A

bank notes

30
Q

the govt’s first solution to this problem was to issue a new currency backed by govt bonds, these US bank notes were called

A

greenbacks

31
Q

in 1863, Congress passed the National Banking Act, which led to the creation of a system of national banks
the act provide 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

32
Q

in ______, the govt officially adopted the gold standard

A

1900

33
Q

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

A

gold standard

34
Q

In 1913, Congress passed the ______, which established the Federal Reserve System- a true central bank

A

Federal Reserve Act

35
Q

The fed consists of ______ regional banks with a central decision- making board

A

12

36
Q

this act installed reforms such as regulating interest rates that banks could not pay and prohibiting banks from selling stock

A

Banking Act of 1933

37
Q

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

A

Federal Deposit Insurance Corporation

38
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

39
Q

______ are the oldest form of banking and are the financial institutions most commonly thought of as a bank

A

privately owned commercial banks

40
Q

______ began in the United States in the 1830s and were originally chartered by individual states as mutual societies for two purposes– to take savings deposits and provide home mortgage loans

A

Saving and Loan Associations

41
Q

______ created a system of federally chartered credit unions

A

Federal Credit Union Act

42
Q

what insures deposits in credit unions?

A

NCUA

43
Q

What is the major difference between credit unions and other financial institutions?

A

membership

44
Q

banks are places where money can be bought and sold

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

A

store money
earn money
borrow money

45
Q

one common loan a bank makes is a ______

A

mortgage

46
Q

if the borrower of money stops making payments they go into ______

A

default

47
Q

______ are issued by banks to users who are borrowers

A

credit cards

48
Q

the ______ lifted the last restriction from the Act of 1933 that had prevented banks, insurance companies, and investment companies from selling the same products and competing with one another

A

Financial Services Act

49
Q

real estate prices ballooned, in part because of ______, or the banks and other financial companies would bundle the mortgages and sell them as mortgage-backed securities, an investment similar to a bond

A

lax lending standards

50
Q

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

A

bond

51
Q

______ has changed the way customers use banks, producing a system generally referred to as electronic banking

A

technology

52
Q

banks have begun using ______, devices that allow bank customers to make deposits, withdrawals, and transfers, and check account balances at any time without seeing a bank officer

A

ATMs

53
Q

______ represents money that the holder has on deposit with the issuer

A

stored-value card

54
Q

debit cards are sometimes called ______

A

check cards

55
Q

______ allows customers who have set up accounts with a bank to perform practically every transaction without setting for in a bank

A

electronic banking

56
Q

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

A

identity theft

57
Q

three major credit-reporting agencies:

A

Experian
Equifax
Trans-Union

58
Q

______ is the measure of your dependability to repay a loan

A

creditworthiness

59
Q

______ is a measure of your financial responsibility

A

character

60
Q

______ is a measure of a consumer’s ability to repay a debt on time

A

capacity

61
Q

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

A

capital

62
Q

examples of capital:

A

stocks, bonds, buildings, and lands

63
Q

a person’s record of paying bills and debts over time is one’s ______

A

credit history

64
Q

a consumer’s ______ is the measure of a person’s creditworthiness

A

credit rating

65
Q

______ is a system that assigns a number, or score, to each consumer indicating whether this person is a good or bad credit risk

A

credit scoring

66
Q

the credit score is based on a formula that was originally developed by the ______

A

FICO

Econ. (7 decks)

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