money and banking

Question 1

anything that people will accept as payment for goods and services

Answer 1

money

Question 2

Money performs three important functions

Answer 2

medium of exchange
store of value
A standard of value

Question 3

is a means through which goods and services can be exchanged

Answer 3

medium of exchange

Question 4

the exchange of goods and services without using money

Answer 4

barter

Question 5

determines the economic worth in the exchange process

Answer 5

standard of value

Question 6

something that holds its value over time

Answer 6

store of value

Question 7

One situation where money does not function well as a store of value is when the economy experiences what ?

Answer 7

significant inflation

Question 8

is a sustained rise in the general level of prices

Answer 8

inflation

Question 9

Four physical properties of money:

Answer 9

durability
portability
divisibility
uniformity

Question 10

Economic properties of money:

Answer 10

stability of value
scarcity
acceptability

Question 11

Money draws its value from three possible sources

Answer 11

commodity money
representative money
fiat money

Question 12

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

Answer 12

commodity money

Question 13

The most common form of commodity money throughout history has been what?

Answer 13

coins made from precious metals

Question 14

paper money backed by something tangible, gold or silver, that gives it value

Answer 14

representative money

Question 15

The earliest forms of representative money were seen when?

Answer 15

in the middle ages

Question 16

who began issuing receipts that promised to pay a certain amount of gold or silver

Answer 16

Merchants, goldsmiths, and moneylenders

Question 17

declared by the government and accepted by citizens to have worth

Answer 17

fiat money

Question 18

The value of the US dollar was linked to the value of what

Answer 18

gold

Question 19

A crucial role of the government in maintaining the value of fiat money is controlling its supply

Answer 19

maintain its scarcity

Question 20

paper money and coins

Answer 20

currency

Question 21

Checking accounts are called what

Answer 21

demand deposits

Question 22

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

Answer 22

near money

Question 23

Most demand deposits are what, that also can be converted into currency simply by writing a check

Answer 23

non interest-bearing checking accounts

Question 24

Traveler’s checks are also considered what

Answer 24

demand deposits

Question 25

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

Answer 25

Negotiable order of withdrawal (NOW)

Question 26

Near money, such as savings accounts and other interest-bearing accounts, cannot be used directly to make what ?

Answer 26

transactions

Question 27

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)

Answer 27

time deposits

Question 28

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

Answer 28

money market accounts

Question 29

who use various instruments to measure the money supply, but the most often cited are M1 and M2

Answer 29

economists

Question 30

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

Answer 30

M1

Question 31

The elements of M1 are referred to as what?

Answer 31

liquid assests

Question 32

means that they are or can easily become currency

Answer 32

liquid assests

Question 33

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

Answer 33

M2

Question 34

M2 includes what

Answer 34

savings accounts, small-denominational time deposits, and money market mutual funds

Question 35

was the Secretary of Treasury in 1789

Answer 35

alexander hamilton

Question 36

Hamilton was a leading Federalist who believed in what

Answer 36

strong central government

Question 37

The First Bank of the US was chartered in

Answer 37

1791

Question 38

Congress finally agreed to charter the Second Bank of the US in

Answer 38

1816

Question 39

was an outspoken critic who mistrusted banks with paper money

Answer 39

andrew jackson

Question 40

During his period, all banks were what, of which issued its own paper currency, called bank notes

Answer 40

state banks

Question 41

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

Answer 41

wildcat bank

Question 42

In 1863, Congress passed, what that led to the creation of a system of national banks that provided for a national currency backed by US Treasury bonds and regulated the minimum amount of capital required for national banks as well as the amount of reserves necessary to back the currency

Answer 42

National Banking Act

Question 43

In 1900, the government officially adopted what

Answer 43

the gold standard

Question 44

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

Answer 44

The gold standard