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Business 121 > Money, Financial Institutions, and the Federal Reserve (20 L.S.) > Flashcards

Money, Financial Institutions, and the Federal Reserve (20 L.S.) Flashcards

1
Q

An increase in the reserve requirement will ___ the amount of money available for lending to customers.

A

Decrease

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2
Q

The ___ ___ is a powerful tool of the Federal Reserve that controls the amount of money banks have available to lend to customers.

A

Reserve Requirement

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3
Q

Disadvantages of bartering include the fact that:

A
  • Your items of value may have a limited life

- You have to carry around goods that are hard to transport

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4
Q

Services provided by nonbanks:

A
  • Accept no deposits
  • offer many services provided by regular banks
  • —Examples of nonbanks—-
  • -life insurance
  • -pension funds
  • -brokerage firms
  • -commercial finance cp
  • -corporate financial services (like GE Capital)
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5
Q

The money supply term that includes readily available cash, checking and savings accounts, individual money markets funds, and Certificates of Deposit is…

A

M-2

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6
Q

A type of time deposit that earns interest which is to be delivered on a future maturity date is called a __ of ___.

A

Certificate of Deposit (CD)

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7
Q

Open-market operations consist of the buying and selling of:

A

Government Bonds

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8
Q

A banker’s ____ is a promise that the bank will pay some specified amount at a particular time with no conditions.

A

Banker’s Acceptance

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9
Q

A way to send transactions directly from one computer to another instead of using paper check

A
  • Electronic funds transfer (EFT)

- Debit Cards

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10
Q

Nonbanks are financial organizations that accept no ____ but offer many of the services proved by regular banks.

A

No deposits

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11
Q

If a bank were to fail, the role of the FDIC would be to arrange to have that bank’s accounts transferred to another bank or….

A

Reimburse depositors up to $250,000 per account

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12
Q

The discount rate is…

A

The interest rate that the Federal Reserve charges member banks

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13
Q

The ___ ____ is responsible for financing international economic development and is sometimes called the International Bank for Reconstruction and Development.

A

World Bank

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14
Q

Credit unions

A
  • Nonprofit
  • Member-owned financial cooperatives
  • Interest-bearing checking accounts at high rates
  • short-term loans
  • Tax-exempt organizations
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15
Q

A demand deposit is the technical name for a(n) ___ account since it is a means of paying for almost any purchase or transaction.

A

Checking Account

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16
Q

In the past, objects such as salt, feathers, fur pelts, stones, rare shells, tea and horses have served as….

A

Money

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17
Q

This is considered a profit seeking organization that has both depositors and borrowers.

A

Commercial banks

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18
Q

A ___ ___ serves the same function as a check by withdrawing funds from a checking account.

A

Debit Card

19
Q

The abbreviation for the independent agency of the United States that insures bank deposits is the ___.

A

Federal Deposit Insurance Corporation (FDIC)

20
Q

A letter of credit is a promise by a bank to…

A

Pay the seller a given amount if certain conditions are met.

21
Q

S&Ls were originally set up to…

A

promote home ownership

22
Q

A savings account is called a(n) ____ deposit because the bank can require you to make prior notice before withdrawal.

A

Time Deposit

23
Q

Effects of the lack of a banking system in early America include the fact that:

A
  • Land banks were created
  • The barter system was commonplace
  • Local governments often would issue currency
24
Q

____ funds are monies put aside by corporations and others for the retirement of their employees.

A

Pension funds

25
Q

The ____ includes coins and paper bills, demand deposits, share drafts, and traveler’s checks.

A

M-1

26
Q

The term for the money supply that includes cash, checking accounts, Certificates of Deposits, money markets, and big deposits such as institutional money market funds is…

A

M-3

M3=M1+M2+Big deposit

27
Q

The five standards for a useful form of money are:

A
  • Portability
  • Divisibility
  • Stability
  • Durability
  • Uniqueness
28
Q

The money supply is controlled by the Federal Reserve in order to better manage the ____ of goods and services.

A

Prices

29
Q

The five major parts to the Federal Reserve System include:

A 
1-the board of governors
2-the Federal Open Market Committee (FOMC)
3- 12 Federal Reserve banks
4- Three advisory councils
5- The member banks of the system
30
Q

The reserve requirement is…

A

A percent of commercial banks’ checking and savings accounts they must keep in the bank

31
Q

The ____ ____ is a powerful tool of the Federal Reserve that controls the amount of money banks have available to lend to customers.

A

Reserve Requirement

32
Q

Economic growth and he creation of jobs depend on the ready availability of _____.

A

Money

33
Q

The competition between banks and nonbanks has ____, with the dividing line becoming less apparent.

A

increased

34
Q

A barter ___ is a modern-day technique to swap goods and services for other goods and services through the use of trade credits.

A

Barter Exchange

35
Q

Banking has to be seen today as….

A

Global in nature.

36
Q

Major services that banks provide to international businesses include:

A
  • letters of credit
  • Banker’s acceptances
  • Money Exchange
37
Q

The primary reason for the creation of the Federal Reserve was to…

A

Prevent another crisis of bank failures

–shortage of cash

38
Q

Reasons the U.S. money and economy are closely linked to the rest of the world include:

A
  • Money is free to flow around the world and is not limited to one country
  • With international trade, a major event is felt by all
39
Q

The check ____ function of the Federal Reserve enables banks to settle demand deposits between member banks.

A

Check-Clearing function

40
Q

A smart card is an electronic funds transfer tool that serves as a(n):

A
  • credit card
  • Debit card
  • Phone card
  • Driver’s license card
  • and more…
41
Q

What does the Federal Reserve make available in order for people to buy goods and services?

A

Money supply

42
Q

TARP (Troubled Assets Relief Program) was proposed by the Treasury Department to be a $700 billion ____ package.

A

Bailout package

43
Q

Considered the dinosaur of the banking industry, written ___ are considered labor intensive, subject to error and crime, and expensive to process.

A

Written Checks

Business 121 (5 decks)

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