Chap 10 Econ
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The ____________________ is the privately owned, publicly controlled, central bank of the United States.
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Federal Reserve System (the Fed)
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____________________ are paper currency issued by the Fed.
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Federal Reserve Notes
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Money that has an alternative use as an economic good is called ____________________.
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Commodity Money
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Money that has value by government decree is known as ____________________.
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Fiat Money
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____________________ is money in the form of gold or silver coins.
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Specie
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Which is a good synonym for the word barter in the term barter economy?
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trade
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Which statement best explains why money was invented?
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Money was invented to facilitate the exchange of goods and services.
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Which of the following is a basic characteristic of money?
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all of the above
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Which of the following is one of the three functions of money?
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store of value
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What are M1 and M2?
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money supplies
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a bank that receives its charter from the state in which it operates
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state bank
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currency that must be accepted for payment by decree of government
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legal tender
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currency backed by government bonds and issued by commercial banks in the National Banking System
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national currency
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a system in which the basic unit of currency is equivalent to, and can be exchanged for, a specific amount of gold
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gold standard
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a bank that can lend to other banks in times of need, or a "bankers' bank"
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central bank
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When did Congress print paper currency for the first time?
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during the Civil War
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By 1861, about how many kinds of paper currencies were in circulation in the United States?
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thousands
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Which of the following terms best describes "greenbacks"?
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legal tender
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The National Banking System was created in _______ to standardize currency and banking practices in the United States.
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1863
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The Federal Reserve is the nation's _________ bank.
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central
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Although banks are engaged in a number of different activities, the primary one is lending money, which they mainly get from investors who purchase stock in banks.
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false
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The shareholders of a corporate bank are responsible for the bank's debts.
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false
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The reserve requirement is the formula used to compute the amount of a depository institution's required reserves.
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true
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Certificates of deposit are also known as DDAs or "Demand Deposit Accounts."
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false
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Certificates of deposit actually are not deposits, but loans from consumers to banks.
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true
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Accessing funds in time deposit accounts is
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restricted
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The risk of ending up with the equivalent of a never-ending loan is one of the disadvantages of using
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credit cards
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Because of technological developments, the banking industry is steadily moving toward ______________ banking.
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electronic
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The technological development in banking called the ___________ is replacing magnetic strip technology.
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smart card
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What will your "creditworthiness" be based on?
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all of the above
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privately owned, publicly controlled, central bank of the United States
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Federal Reserve System (the Fed)
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money by government decree; has no alternative value or use as a commodity
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fiat money
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a commercial bank chartered by the National Banking System
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national bank
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a system in which the basic unit of currency is equivalent to, and can be exchanged for, a specific amount of gold
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gold standard
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a bank that can lend to other banks in times of need, or a "bankers' bank"
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central bank
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the United States government institution that provides deposit insurance on the depositor's account
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Federal Deposit Insurance Corporation (FDIC)
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form of business organization recognized by law as a separate legal entity with nearly all the rights and responsibilities of an individual, including the right to buy and sell property, enter into legal contracts, sue, and be sued
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corporation
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certificate of ownership in a corporation
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stock
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receipt showing that an investor has made an interest-bearing loan to a financial institution
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cerificates of deposit (CD's)
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formula used to compute the amount of a depository institution's required reserves
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reserve requirement
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You pick up a $1 bill. What are you holding?
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all of the above
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Which of the following is an example of fiat money?
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wampum
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You can easily carry money in a pocket or purse. This reflects what characteristic of money?
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portability
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Printed on a Federal Reserve note is this statement: "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE." This reflects money's function as
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a medium of exchange
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In the early 1800s, currency in the United States was issued by
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banks
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During the Civil War, Congress enacted the National Currency Act, which
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all of the above
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The United States went on the gold standard in ________ and then went off the gold standard in ________.
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1900, 1933
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Most banks are established
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as corporations
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Which of the following can cost you money in large interest payments?
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credit card
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Which of the following is a DDA?
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a checking account
