Economics Chapter 10 Pre-Test – Flashcards
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example of a barter system
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instead of paying rent, you clean the house for the owner
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example of money as a unit of account
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checking the price of a camera at several stores before buying it at the lowest price
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main disadvantage of using shells as money instead of coins
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uniformity
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example of representative money
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an IOU note
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purpose of FDIC
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make sure that customers do not lose money if a bank fails
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what did federalist believe about banking
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centralized banking system was necessary
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what occurred during the free banking era
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currency varied widely from state to state
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what were greenbacks
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privately issued currency used by the union during the civil war
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mortgage used to purchase
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real estate
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not example of a liquid asset
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certificate of deposit
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why is using coins as money easier than using gold bars
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coins are more portable
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what happens during a bank run
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customers withdraw more money than the bank has on hand
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necessary for fiat money to work
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government must control the money supply
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what happens when you make a purchase using a credit card
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the credit card issuer pays the store
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largest source of income for banks
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the interest they receive from loans
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not a cause of the savings and loan crisis
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the gold reserve act
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not example of M1 money
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a mutual fund
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leander likely to charge you the highest interest rate on your loans
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finance company
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near money includes
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deposits in savings accounts and money market mutual funds
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a payment by debit card is the electronic form of a payment by
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check
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how did penny and john pay for the goods in their transaction
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bartering
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which are true
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money is a medium of exchange, money is a unit of account, money serves as a store of value
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what was the function of gold
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used as a currency
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what characteristic of money did the Russian currency lack
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acceptability
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why is representative money more useful than commodity money
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portable, durable, divisible, and acceptable. exchanged for something else of value
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american leaders in the early us wanted to establish a stable banking system in order to
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promote international trade and economic growth
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people distrusted the banking system
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many banks did not have enough gold or silver to back the paper money
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how did people have confidence in the nations currency
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adopted the gold standard
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what protections does the FDIC give you?
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your deposits are protected
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how did high interest rates affect savings and loans in the 80's
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lost money because they had to pay high interest
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practice of only retaining a portion of deposits on hand
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fractional reserve banking
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why did she have to pay $2,327 more than the price of the car
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interest for borrowing the principal of $18,000
