Money, Financial Institutions, and the Federal Reserve (20 L.S.) Flashcards Preview

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Flashcards in Money, Financial Institutions, and the Federal Reserve (20 L.S.) Deck (43)
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1

An increase in the reserve requirement will ___ the amount of money available for lending to customers.

Decrease

2

The ___ ___ is a powerful tool of the Federal Reserve that controls the amount of money banks have available to lend to customers.

Reserve Requirement

3

Disadvantages of bartering include the fact that:

-Your items of value may have a limited life
-You have to carry around goods that are hard to transport

4

Services provided by nonbanks:

-Accept no deposits
-offer many services provided by regular banks
----Examples of nonbanks----
--life insurance
--pension funds
--brokerage firms
--commercial finance cp
--corporate financial services (like GE Capital)

5

The money supply term that includes readily available cash, checking and savings accounts, individual money markets funds, and Certificates of Deposit is...

M-2

6

A type of time deposit that earns interest which is to be delivered on a future maturity date is called a __ of ___.

Certificate of Deposit (CD)

7

Open-market operations consist of the buying and selling of:

Government Bonds

8

A banker's ____ is a promise that the bank will pay some specified amount at a particular time with no conditions.

Banker's Acceptance

9

A way to send transactions directly from one computer to another instead of using paper check

-Electronic funds transfer (EFT)
-Debit Cards

10

Nonbanks are financial organizations that accept no ____ but offer many of the services proved by regular banks.

No deposits

11

If a bank were to fail, the role of the FDIC would be to arrange to have that bank's accounts transferred to another bank or....

Reimburse depositors up to $250,000 per account

12

The discount rate is...

The interest rate that the Federal Reserve charges member banks

13

The ___ ____ is responsible for financing international economic development and is sometimes called the International Bank for Reconstruction and Development.

World Bank

14

Credit unions

-Nonprofit
-Member-owned financial cooperatives
-Interest-bearing checking accounts at high rates
-short-term loans
-Tax-exempt organizations

15

A demand deposit is the technical name for a(n) ___ account since it is a means of paying for almost any purchase or transaction.

Checking Account

16

In the past, objects such as salt, feathers, fur pelts, stones, rare shells, tea and horses have served as....

Money

17

This is considered a profit seeking organization that has both depositors and borrowers.

Commercial banks

18

A ___ ___ serves the same function as a check by withdrawing funds from a checking account.

Debit Card

19

The abbreviation for the independent agency of the United States that insures bank deposits is the ___.

Federal Deposit Insurance Corporation (FDIC)

20

A letter of credit is a promise by a bank to...

Pay the seller a given amount if certain conditions are met.

21

S&Ls were originally set up to...

promote home ownership

22

A savings account is called a(n) ____ deposit because the bank can require you to make prior notice before withdrawal.

Time Deposit

23

Effects of the lack of a banking system in early America include the fact that:

-Land banks were created
-The barter system was commonplace
-Local governments often would issue currency

24

____ funds are monies put aside by corporations and others for the retirement of their employees.

Pension funds

25

The ____ includes coins and paper bills, demand deposits, share drafts, and traveler's checks.

M-1

26

The term for the money supply that includes cash, checking accounts, Certificates of Deposits, money markets, and big deposits such as institutional money market funds is...

M-3

M3=M1+M2+Big deposit

27

The five standards for a useful form of money are:

-Portability
-Divisibility
-Stability
-Durability
-Uniqueness

28

The money supply is controlled by the Federal Reserve in order to better manage the ____ of goods and services.

Prices

29

The five major parts to the Federal Reserve System include:

1-the board of governors
2-the Federal Open Market Committee (FOMC)
3- 12 Federal Reserve banks
4- Three advisory councils
5- The member banks of the system

30

The reserve requirement is...

A percent of commercial banks' checking and savings accounts they must keep in the bank