Module 6

Question 1

Article 1 section 8

Answer 1

The congress has the power to coin money, regulate the value thereof, and of foreign coin

Punishment of counterfeiting

Question 2

3 functions of money

Answer 2

1) medium of exchange
2) store of value
3) unit of account

Question 3

Commodity money

Answer 3

Made from something of value

Tobacco leaves, gold, silver

Question 4

Bimetallic monetary system

Answer 4

Alexander Hamilton Created this system (both good and silver were legal money)

Question 5

The crime of 1873

Answer 5

Abandonment of silver and switched officially to just gold as money

Question 6

Stopped the domestic gold standard in 1934

Answer 6

Woodrow Wilson

Question 7

Stopped using gold internationally in 1972

Answer 7

Richard Nixon

Question 8

Most used coin in the US from mid 1700s to 1850

Answer 8

Spanish Silver Dollar

Question 9

Fiat

Answer 9

By order

Question 10

How does money affect the economy

Answer 10

Prices, interest rates, real gdp

Question 11

The __________ determines interest rates

Answer 11

Money supply

Question 12

Central banks functions

Answer 12

1) clear electronic payments and checks
2) bankers bank
3) regulates banks
4) control money and interest rates
5) lenders of last resort

Question 13

When was fed founded?

Answer 13

1913

Question 14

The feds board of governors has ___ people with ____ year terms

Answer 14

7

14

Question 15

The fed has ___ districts

Answer 15

12

Question 16

Each fed district has a president and a __ person board of governors.

Answer 16

9

3 bankers, 3 business people, 3 non-banking public

Question 17

Is the entity of the fed responsible for controlling the money supply and interest rates.

Answer 17

Federal Open Market Committee

Question 18

The Federal Open Market Committee is composed of

Answer 18

7 members of board of governors

5 of bank presidents

Question 19

The federal reserve controls the money supply by buying and selling bonds?

Answer 19

True

Question 20

Discount Rate

Answer 20

Rate at which banks borrow from the fed

Question 21

Federal funds rate

Answer 21

Rate at which the banks borrow from each other

Question 22

Article 1 section 10

Answer 22

No state shall coin money, emit bills of credit, make anything but gold and silver coin a tender in payments of debt

Question 23

How did McCulloch vs Maryland 1819 start

Answer 23

Congress puts a branch of The Bank of United States in Maryland and Maryland rejects this bank so they put a steep tax on this bank.

Question 24

McCulloch vs Maryland 1819

Answer 24

1) congress has the power to create a corporation
2) has the power to create a bank -“all laws necessary and proper”

The constitution contains implied powers

The state of Maryland can’t tax the federal government

Question 25

Outcome of McCulloch vs Maryland

Answer 25

Banks can print their own money

Andrew Jackson refuses to renew the charter of the Second Bank of the United States

Question 26

Created Federal Banks and only they can print money (to raise money to fight the civil war) (1863)

Federal Banks required to buy Federal Bonds

Banks can switch from being chartered from state to bank being chartered by federal government

Answer 26

Samuel Chase

Question 27

1869 Hepburn vs Griswold

After Us issues paper money not redeemable in 1863

Answer 27

Congress may issue bonds but may not make paper money legal tender. Only gold and silver

Question 28

In 1871, republicans voted for congress to be able to issue paper money not redeemable in order to deal with national emergencies

Answer 28

True

Question 29

Gresham’s Law

Answer 29

If there’s counterfeit money and good money, people will hold the good money and spend the counterfeit money. So must protect nations currency from counterfeiting.