ECON 131 Practice Final Ch. 14 – Flashcards

In macroeconomics, ___________________________ describes a situation in which two people each want to exchange some good or service that the other can provide.

If Bill performs plumbing upgrades for Alice in exchange for her incorporating his business, then their _________________________ will be satisfied.

______ is a completely inadequate mechanism ______ in a modern advanced economy.

In modern economies, credit cards are a _________________ because of their wide acceptance as a method of payment for both goods and services.

________________ serves society in three functions: medium of exchange, unit of account, and store of value.

In 2010, Tara used $50,000.00 from funds she had invested in certificates of deposit as a down payment to buy a house. What function did this portion of her investments serve when she made the down payment?

Which of the following would function as a store of value, and also provide a medium of exchange, and unit of account?

If mollusk shells were accepted as a method of payment in modern-day markets, what economic role would they play in the financial system?

Which of the following is a valid criticism of the use of money as a store of value in modern economies?

Which of the following would be classified in the M1 category of the money supply?

With respect to measuring the money supply, which of the following terms describes a checking account?

Which of the following terms is considered to be a narrow definition of the money supply that includes, among other things, currency?

If Brent uses his credit card to purchase a new television, then the money to pay the retailer is taken from:

If Evelyn uses her debit card to buy an iPod, then the money to pay the retailer will come from:

If Sarah uses her smart card to purchase movies over the internet, then the money to pay the retailer will come from:

Stealth bank holds deposits of $600 million. It holds reserves of $30 million and government bonds worth $80 million. The current market value of the bank's loans is $400 million. What is the value of the bank's total liabilities?

Stealth bank has deposits of $700 million. It holds reserves of $20 million and has purchased government bonds worth $350 million. The banks loans, if sold at current 8 market value, would be worth $600 million. What is the total value of Stealth bank's assets?

Stealth bank has deposits of $350 million. It holds reserves of $30 million and government bonds worth $70 million. If the bank sells its loans at market value of $400 million, what will its total assets equal?

Stealth bank has deposits of $300 million. It holds reserves of $20 million and has purchased government bonds worth $300 million. The bank's loans, if sold at current market value, would be worth $600 million. What does Stealth bank's net worth equal?

___are funds that the bank keeps on hand that are not loaned out or invested in bonds.

The money multiplier is equal to the _______________ in the economy divided by the original _________________.

The quantity of money in an economy and the _____________________ are inextricably intertwined.

Banks typically come under financial stress because of:

If the central bank increases the amount of reserves banks are required to hold to 20%, then:

_________________________ are a form of deposits held in banks that are available by making a cash withdrawal or writing a check.

_______ that requires the depositor to commit to leaving their funds in the bank for a certain period of time, in exchange for a higher rate of interest are also called _________.

The term ___________________ describes the proportion of deposits that the bank must hold in the form of reserves that are not loaned out or invested in bonds.

_____________ are a form of financial instrument through which corporations and governments borrow money from financial investors and promise to repay with interest.

In an economy with _______________, money loses some buying power each year, but it remains money.

The people in an economy have $10 million in money. There is only one bank that all the people deposit their money in and it holds 10% of the deposits as reserves. What is the money multiplier in this economy?

The market where loans are made to borrowers is called the:

Stealth Bank is holding $4 million in reserves, $9 million in government bonds and $9.6 million in low risk mortgage loans. Out of the $20 million in customers' deposits, Stealth holds $13.1 million in the form of certificates of deposit. Describe the formula for determining Stealth Bank's net worth and, using the figures above, determine the Bank's net worth. Identify the criteria for classifying a bank as healthy or unhealthy and determine which applies to Stealth Bank in these circumstances.