chapter 16 Flashcards
what are 5 standards for a useful form of money
portability
divisibility
stability
durability
and uniqueness
what are bitcoin, and can you buy things online with them
bitcoins are a form of online money and there are online stores that accepts the currency through bitcoin
how does the federal reserve control the money supply
-keeps fund i the fed reserve system
-buys and sells government securities (open market operations)
-lends money to banks (to discount rate
to increase money supply, the fed can cut the reserve requirement, buy gov bonds and lower the discount rate
what institutions make up the banking system
savings and loans, commercial banks, and credit unions
what do banks offer
services like savings accounts, checking accounts, certificates of deposit, loans, individual retirement accounts, safe deposit boxes, online banking, life insurance, brokerage services, and travelers checks
whats a credit union
a member owned cooperative that offers everything a bank does, it may also sell life insurance and offer mortgages. Credit union interest rates are sometimes higher than those from banks and loan rates are often lower
what are some other financial institutions that make loans and perform bank-like operations
nonbanks include life insurance companies that lend out their funds, pension funds that invest in stocks and bonds that make loans, brokerage firms that offer investment services and commercial finance companies
what caused the banking crisis
their goal was to have affordable housing so the government urged banks to make loans to some who couldn’t afford to repay and they wanted to lower the risk of such loans so they created mortgage backed securities and sold them to other banks and organizations. The government didn’t regulate these transactions well and many banks failed because people housing values fell and people defaulted on their loans
what agencies insure the money you put into a bank, S&L, or credit union
money deposited banks are insured by the federal deposit insurance corporation (FDIC)
S&L’s are insured by the savings association insurance fund (SAIF)
credit unions are insured by the national credit union administration (NCUA)
How much money are accounts insured up to
$250,000
what are debt cards
looks like a credit card but withdraws money that is already in your account- automatically transfers funds to sellers
what are smart cards
an electronic funds transfer tool that combines a credit card, debit card, phone card, drivers license and more- they have microprocessors instead of the typical card strip
what do we mean by global markets
banks do not keep their money in their own countries
whats the world bank responsible for
primarily responsible for financing economic development
what is the international monetary fund
IMF was established to assist the smooth flow of money among nations
