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60 Cards in this Set

  • Front
  • Back
1. What is the definition of money? (12)-
any legal tender that is accepted by most.
2. What has served as money in the past? (12)-
gold, silver, anything that was seen worth value.
3. Name the three functions of money (12)-
medium of exchange, union of account, store of value.
4. What do we call it when we trade goods and services for other goods and services? (12)-
5. Name the five characteristics of money. (12)-
stable in value, generally accepted, durable, divisible, portable
6. Name the parts that make up M1? (12)-
coins, cash, demand deposits, money orders, other check type money
7. What does double coincidence of wants mean? (12)-
When one person has what the other has for exchange what the other person wants.
8. What do we call it when a substance must be accepted to pay all debts, public and private? (12)-
legal tender.
9. What are Federal Reserve Notes? (12)-
1, 5, 10, 20, 50, 100 dollar bills
10. What is fractional reserve banking? (12)-
holding only a portion of a persons depository money
11. What is the name we give checking accounts in banks? (12)-
demand deposits
12. What do we call things like time deposits and savings accounts? (12)-
near money
13. What causes a nation’s currency to gain or lose value against other countries’ currency? (12)-
whether other countries have faith in a country’s economy, and stability of the government.
14. What is the dual system of banking? (12)-
federal and state governments may charter banks.
15. What government corporation is responsible for insuring your deposits in a bank? (12)-
FDIC(Federal deposit insurance incorporation)
16. What are the three primary functions of depository institutions? (12)-
safe keeping of money, making loans of money, creating more money
17. What is the sub-prime mortgage crisis and what are the causes and consequences of this crisis? (12)-
when you give a loan to a borrower to buy a house who has poor credit, interest rates lowered to 1% making it easier to borrow, foreclosure happens and debts were not being paid economy went into panic.
18. What term do we use for the ease of turning assets into cash quickly without loss of value in terms of money? (12)-
19. What is a nonprofit cooperative that provides banking services for its members called? (12)-
credit union
20. What does appreciation/depreciation of a nation’s currency mean? (12)-
appreciation means dollar worth more, depreciation dollar is worth less.
21. What is the impact of one country’s currency becoming worth less than another country? (12)-
Goods become less in that country, good for consumers bad for trading, bad for the strength of the currency.
22. What do we call it when a nation tries to lower the value of its currency and/or other actions by the government to make its goods cheaper in another nation than its own? (12)-
23. What is EFT? (12)-
Electronic funds transfer (credit Card)
24. What do we call the property a borrower puts up to guarantee his/her loan and the bank may take the property if the borrower does not repay the loan? (12)-
25. What do we call it when a bank takes a home because the borrower did not make the payments? (12)-
26. What are the differences between the three main types of loans issued by depository institutions? (12)-
coupon loan-home equity loan, Secured loan-loan with collateral Fixed payment loan-pay a monthly payment to the bank
27. What is a secured loan? (12)-
loan with collateral
28. What factors or variables determine the interest rate a bank or financial institution charges for a loan? (12)-
cost of money to the bank, dependability of the borrower, paying back the loan, size and length of loan, banks willingness to make the loan.
29. What do we call the money that a bank must keep on hand to back up deposits? (13)-
required reserve
30. What do we call the money that a bank has left after the money they must keep to back up deposits? (13)-
excess reserves
31. What are IOUs issued, or money borrowed, by the Fed on behalf of the United States Treasury called? (13)-
government security or treasury bonds.
32. Who are the money partners that ensure an ample supply of cash to the public? (13)-
federal reserve, department of treasury
33. What government agency serves as the nation’s central bank? (13)-
federal reserve
34. What is the nickname of the Federal Reserve System? (13)-
the fed
35. Name the Parts of the Federal Reserve System. (13)-
board of governors, 12 federal reserve banks, Federal Open market committee.
36. Which part of the Federal Reserve System is the governing body? (13)-
Board of Governers
37. What are the functions of the Federal Reserve System? (13)-
to control the money supply, clearing inter bank payments, supervise banking, acts as the governments banker.
38. What part of the Federal Reserve System is responsible for the buying and selling of government securities? (13)-
Federal Open market committee.
39. How many districts did the Federal Reserve Act divide the nation into? (13)-
40. Why are Federal Reserve Banks called ‘banker’s banks”? (13)-
because commercial banks come to the federal banks.
41. Which city is the main office of our Federal Reserve district located? (13)-
42. What is the most important function that the Federal Reserve System serves? (13)-
To control the money supply
43. How does the banking system create more money, without printing more currency? (13)-
fractional reserves that create loans
44. What do we call actions taken by the Federal Reserve System to control the nation’s money supply as well as interest rates? (13)
45. What do we call it when the Federal Reserve System attempts to restrict available credit? (13)-
tight money policy
46. What do we call it when the Federal Reserve System attempts to expand the money supply (13)-
easy money
47. What are the three instruments that the Federal Reserve System can use to control the money supply? (13)-
raise reserve requirments of a bank, open market operations, discount/federal funds rate.
48. Which one of the three instruments is most effective and is most often used by the Federal Reserve System? (13)-
open market operations
49. What is the prime rate? (13)-
best rate financial institutions charge there best customers
50. What is the discount rate? (13)-
the rate the fed charges members banks to borrow money
51. What is the federal funds rate? (13)-
the rate that two commercial charge each other.
52. Which of the following is generally the highest, discount rate, prime rate, personal loan rate? (13)-
personal loan rate
53. What effect on the money supply will the Federal Reserve System selling government securities have? (13)-
decrease or restrict money supply
54. What school of economic thought believes control of the money supply is the key factor determining the economic health of the nation? (13)-
monetarism(Milton freedman, keep the governemtn out of the ecnomy)
55. Who is the key founder of the school of economic thought in the previous question? (13)-
Milton Freedmon
56. What three important areas of the economy are affected by changes in the cost and availability of loans? (13)-
housing, automobiles, large appliances.
57. What effect will an increase in reserve requirements have on the money supply? (13)-
banks will hold on to more money meaning they will not lend as much
58. Under what economic conditions should the Federal Reserve System restrict growth in the money supply? (13)-
high inflation
59. Under what economic conditions should the Federal Reserve System increase the growth of the money supply? (13)-
low inflation, high unemployment, declining GEP
60. What are real interest rates and what impact do they have on borrowing? (12 & 13)-
what the market is charging at the moment plus inflation, when real interest rates are high then there is less borrowing.