Ch 16 and Ch C

Question 1

5 Standards for a useful form of money

Answer 1

profitability, divisibility, durability, uniqueness and stability

Question 2

Forms of money

Answer 2

online payments, bitcoin

Question 3

Money supply of the Fed Res that they make available for…

Answer 3

amount of $ the fed makes available for ppl to buy goods and services

Question 4

What is quantitative easing? (fed reserve)

Answer 4

monetary stragety to create more $ when it believes that $ is needed to get economy moving again

Question 5

M1 consists of

Answer 5

coins and paper bills

Question 6

M2 consists of

Answer 6

M1 + accounts, mutual funds, certificates of deposits

Question 7

M3 consists of

Answer 7

M2+ institutional money market funds

Question 8

Why does money supply need to be controlled?

Answer 8

can affect employment/economic growth

stabilize prices

Question 9

who controls money supply?

Answer 9

central banks

Question 10

rising/ Falling dollar values refers to

Answer 10

increased/ decreased amount of goods/services you can buy with $ in global market

Question 11

Parts of the Fed reserve

Answer 11

1. Board of governors: to set monetary policy
2. Federal Open Market Committee (represent institutions)
3. 12 banks fed res
4. 3 advisory councils
5. member banks of systems

Question 12

The monetary policy determines that

Answer 12

reserve requirement

Question 13

what is the reserve requirement

Answer 13

level of the reserve funds all financial institutions must keep at one of 12 banks

Question 14

If Reserve requirement goes up

Answer 14

then money becomes scarce

Question 15

open market operations consist of

Answer 15

buying and selling govt. bonds. to decrease money supply - govt sells bonds

Question 16

What is the discount rate

Answer 16

interest rate the Fed charges for loans to member banks

when it goes up —-> reduces loans

Question 17

land banks

Answer 17

lends $ to farmers until 1741

Question 18

commercial banks

Answer 18

are profit seeking organizations that receives deposits

Question 19

checking account

Answer 19

demand deposit

Question 20

savings account

Answer 20

time deposit

Question 21

certificate of deposit

Answer 21

time deposit that earns interest

Question 22

savings and loans associations

Answer 22

accepts both savings/checking deposits and provides home mortgages and loans

Question 23

savings and loan associations failures

Answer 23

inflation/ deregulation / fraud

Question 24

credit unions

Answer 24

non profit member owned financial cooperatives that offer bank services: interest checking accounts with high rates, short term loans w/ low rates/ life insurance and home mortgages

Question 25

nonbanks

Answer 25

financial organizations that accept no deposits but offer many services provided by regular banks ex. life ins, pension funds, brokerage firms, commercial finance companies, financial services

Question 26

pension funds

Answer 26

monies put aside by corporations non profit organizations, unions invested in low return safe stocks, govt securities, corporate bonds

Question 27

Federal deposit Insurance corporations

Answer 27

insures banks deposits / mostly commercial banks

Question 28

savings association insurance fund

Answer 28

holders of accounts in savings and loan associations

Question 29

national credit union administration

Answer 29

provides $250000 per depositor / institution for all accounts

Question 30

electronic funds transfer (eft)

Answer 30

messages about a transaction that are sent from one computer to another for easier transfers (ex. direct deposit/ direct payments)

Question 31

debit card

Answer 31

withdraws funds

Question 32

letters of credit

Answer 32

a promise by a bank to pay seller a given amount if certain coniditions are met

Question 33

bankers acceptance

Answer 33

promises that the bank will pay some specified amount at a particular time

Question 34

world bank

Answer 34

responsible for financing development (reconstruction) lends most money to developing nations to improve productivity and raise standards of life