Chapter 10: Economics – Flashcards
Unlock all answers in this set
Unlock answersquestion
"Specie" is a term used as early as the 1600s for..
answer
gold and silver coins.
question
"Objects that have value in themselves and that are also used as money" is the definition for..
answer
commodity money.
question
Money that has value because the government has ordered that it is an acceptable means to pay debts is referred to as..
answer
fiat money.
question
A dollar bill typically lasts..
answer
1 year in circulation.
question
Which of the following is an example of money as a store of value?
answer
Making money at a garage sale and saving it.
question
What is an example of commodity money?
answer
Precious stones
question
Barter is..
answer
the direct exchange of one set of goods or services for another.
question
For a traveler, paper currency would be preferable to coins because of..
answer
portability.
question
"Objects that have value because the holder can exchange them for something else of value" defines..
answer
representative money.
question
Anything that is used to determine value during the exchange of goods and services is a..
answer
medium of exchange.
question
Which of the following is an example of an informal bank?
answer
A merchant who stores money for customers.
question
The Antifederalist movement, which supported a decentralized banking system, was led by..
answer
Thomas Jefferson.
question
A bank chartered, or licensed, by the national government is called..
answer
a national bank.
question
The government agency that covers customer deposits if a bank fails is the..
answer
Federal Deposit Insurance Corporation (FDIC).
question
The central banking system for the United States that was set up in 1913 is known as the..
answer
Federal Reserve System.
question
Which of these currencies became worthless by the end of the Civil War?
answer
Confederate currency
question
A bank that belongs to the Federal Reserve System is called a..
answer
member bank.
question
Which Act abolished the independence of the savings and loan industry and transferred insurance responsibilities to the Federal Deposit Insurance Corporation (FDIC)?
answer
Financial Institutions Reform, Recovery, and Enforcement Act
question
A banker exchanges bank notes for silver and gold money then leaves town and disappears. This is a..
answer
fraud.
question
What is the name for a monetary system in which paper money and coins are equal to the value of a certain amount of gold?
answer
Gold standard
question
The ability to be used as, or directly converted to, cash is..
answer
liquidity.
question
What is the simple interest of a loan for $1,000 with 5% interest after 3 years?
answer
$150
question
A NOW account is a type of..
answer
checking account that pays interest.
question
Which of the following does NOT belong in the M2 category?
answer
Currency held in bank vaults
question
Which one of the following is NOT one of the four most common ways people can save money in banks?
answer
Fractional reserves
question
"Principal" is the..
answer
amount of money borrowed.
question
The money in checking accounts is referred to as..
answer
a demand deposit.
question
"Default" refers to the..
answer
failure to pay back a loan.
question
The fractional banking system..
answer
ensures growth in the economy.
question
The price paid for the use of borrowed money is referred to as the..
answer
interest.
question
Certificates of Deposit..
answer
offers a guaranteed rate of interest over a certain period of time.
question
Representative money gets its value from the fact that..
answer
it represents objects of value for which it can be exchanged.
question
All of the following are examples of commodity money EXCEPT..
answer
an IOU.
question
A bank is an institution..
answer
for receiving, keeping, and lending money.
question
All of the following are characteristics of money EXCEPT..
answer
accountability.
question
Commodity money can only work in..
answer
a simple economic system.
question
Uniformity of currency means that it is..
answer
easy to count and measure.
question
An example of a stored value card is a(n)..
answer
prepaid phone card.
question
Which type of bank provides the most services and plays the largest role in the economy?
answer
Commercial Bank
question
All of the following are examples of a use of money EXCEPT a..
answer
means of barter.
question
All of the following are considered liquid assets EXCEPT..
answer
money market mutual funds.
question
In case of a bank failure, customer deposits up to $100,000 per account are guaranteed by the..
answer
Federal Deposit Insurance Corporation.
question
All of the following are services provided by banks and other financial institutions EXCEPT..
answer
increasing the amount of money in circulation.
question
Assets that have liquidity are..
answer
easy to turn into cash.
question
ATMs are computers that are used..
answer
by customers to conduct their banking business.
question
The Free Banking Era between 1837 and 1863 was dominated by..
answer
state-chartered banks.
question
The National Banking Acts of 1863 and 1864 gave the federal government power to do all the following EXCEPT..
answer
seize the assets of any individual.
question
The type of currency used in the United States today is..
answer
fiat money.
question
Compound interest is interest paid..
answer
on both principal and accumulated interest.
question
The nation's first true central bank was the..
answer
Federal Reserve System.
