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22 Cards in this Set
- Front
- Back
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1.Identify the primary functions of money.
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P 277
Meduium of exchange Unit of account Store of value. |
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2.What does the term “liquidity” refer to?
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P
The ease with which an asset can be converted quickly into cash with little or no loss of purchase power. Money is said to be perfectly liquid, whereas other assets have a lesser degree of liquidity. |
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3.What is M1? What is the difference between token money, Federal Reserve Notes, demand deposits and time deposits?
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P
The most narrowly defined money supply, equal to currency in the hands of the public and the checkable deposits of commercial banks and thrift institutions. |
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4.What is the difference between commercial banks and thrifts?
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P
comercial bank- a firm that engages in the business of banking(accepts deposits, offers checking accounts, and makes loans. Thrift institution- a savings and loan association, mutual savings bank, or credit union. |
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5.What is M2?
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P279
A more broadly defined money supply, equal to M1 plus non checkable savings accounts(including money market deposits accounts) small time deposits (deposits of less then 100,000$), and individual money market mutual fund balances. |
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6.What backs U.S. currency?
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P280
essentially is backed (guaranteed by governement's ability to keep the value of money relatively stable. Nothing more! |
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7.Why does money have value?
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P281
Acceptability Legal Tender Relative Scarcity |
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8.What does the term “the purchasing power of money” refer to? What factors influence its value?
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P281
is the amount of goods and services a unit of money will buy. |
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9.What historical events resulted in the establishment of the Federal Reserve Bank?
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P283
An unussually acute banking crisis in 1907 motivated congress to appoint the national Monetary commision to study the monetary and banking problems of the economy and tooutline a course of action for congress. The result was the federal Reserve Act of 1913. |
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10.What is the role of the Federal Reserve’s Board of Governors? How do they get to be on the Board? How long do they serve?
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P283
makes the basic policy decisions that provide monetary control of the U.S money and banking system.consists of 7 members appointed by the president and confirmed by congress, terms are 14 years and staggered so that one member is replaced every two years. chairman and vice chairman are appointed for 4 years. |
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11.How many Federal Reserve Banks are there?
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P283
The 12 banks chartered by the US government to control the money supply and perform other functions |
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12.Why is the Federal Reserve referred to as a “quasi-public bank”?
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P 284
a bank that is privately owned but governmentally(public) controlled; each of the U.S. Federal Reserve Banks |
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13.Why is the FRB often referred to as “the banker’s bank”?
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P284
A bank that accepts the deposits of and makes loans to depository institutions; in the United States; a federal reserve bank. Borrower of last resort, where bankers go to get money. |
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14.What is the FOMC? Who is on it? What does it do?
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P285
Federal Open Market Commitee- The 12 member group that determines the purchase and sale policies of the federal reserve banks in the market for the U.S. government securities. |
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15.Who regulates "thrifts”?
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P285
by agencies separate and apart from the board of governors and the federal reseve banks. "read more in the paragraph" OTS Office of Thrift Supervision, |
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16.What are the major functions of the Federal Reserve?
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P285
Issuing Currency Setting reserve requirements and holding reserves Lending money providing for check collection acting as fiscal agent supervising bank controlling the money supply |
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17.Is the FRB really independent of Congress and the White House?
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P286
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18.How have bank mergers changed the banking industry?
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P287 convergence
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19.What actions did Congress take in 1996 and 1999 that affected the type of services that banks could offer?
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P287
They deregulated- Glass Stegall Congress greatly loosened the depression era prohibition against banks selling stocks, bonds, and mutual funds and it ended the prohibiton altogether in the Finacial services Modernization Act of 1999. Banks, thrifts, pensions companies, insurance companies and security firms can now merge with one another and sell each others products. |
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20.How has globalization affected the U.S. financial markets?
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P
compete with banks in other countries |
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21.In what ways has the use of electronic payments affected the economy?
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P
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22.THE LAST WORD: What economic issues does the author enumerate in this article about the Global Greenback?
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P
interesting how much is held by foreigners |
