Chapter 10 Money and Banking Review Questions – Flashcards
Unlock all answers in this set
Unlock answersquestion
A dollar bill typically lasts
answer
1 year in circulation.
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
Barter is
answer
the direct exchange of one set of goods or services for another.
question
What is not an example of money as a store of value?
answer
making money at a garage sale and saving it
question
For a traveler, paper currency would be preferable to coins because of
answer
portability
question
"Objects that have value in themselves and that are also used as money" is the definition for
answer
commodity money.
question
"Specie" is a term used as early as the 1600s for
answer
gold and silver coins
question
Money that has value because the government has ordered that it is an acceptable means to pay debt referred to as
answer
fiat money
question
What is an example of commodity money?
answer
precious stones
question
Which of these currencies became worthless by the end of the Civil War?
answer
Confederate currency
question
Which Act abolished the independence of the savings and loan industry and trasnferred insurance responsibilities to the Federal Deposit insurance Corporation (FDIC)?
answer
Financial Institutions Reform, Recovery, and Enforcement Act
question
An example of informal bank:
answer
A merchant who stores money for customers
question
A bank chartered, or licensed, by the national government is called
answer
a national bank
question
A banker exchanges bank notes for silver and gold money then leaves town and disappears. This is a
answer
fraud.
question
A bank that belongs to the Federal Reserve System is called a
answer
member bank.
question
The central banking system for the United States that was set up in 1913 is known as the
answer
Federal Reserve System.
question
The Antifederalist movement, which supported a decentralized banking system, was led by
answer
Thomas Jefferson.
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 government agency that covers customer deposits if a bank fails is the
answer
Federal Deposit Insurance Corporation (FDIC)
question
"Default" refers to the
answer
failure to pay back a loan.
question
"Principal" is the
answer
amount of money borrowed.
question
The ability to be used as, or directly converted to, cash is
answer
liquidity.
question
The price paid for the use of borrowed money is referred to as the
answer
interest.
question
What is the simple interest of a loan for $1,000 with 5% interest after 3 years?
answer
$150
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
The money in checking accounts is referred to as
answer
a demand deposit.
question
A NOW account is a type of
answer
checking account that yields higher interest.
question
What does NOT belong in the M2 category?
answer
currency held in bank vaults.
question
The fractional banking system
answer
ensures growth in the economy.
