Test 2

Question 1

A system of money in general use in a particular country

Answer 1

Currency

Question 2

A written dated and signed draft that directs a bank to pay a specific sum of money to the bearer

Answer 2

Check

Question 3

Federales job to regulate banks and make sure people have faith in our financial system

Answer 3

Federal Reserve

Question 4

An institution that deals in money and its substitutes and provides other money related services

Answer 4

Bank

Question 5

A financial institution that accepts checkable deposits and savings deposits and that makes different loans

Answer 5

Securities and loans

Question 6

Member owned financial cooperative

Answer 6

Credit Union

Question 7

An independent agency created by Congress to maintain stability and public confidence in the nations financial system

Answer 7

Federal Deposit Insurance Corporation

Question 8

an institution that administered deposit insurance for savings and loan institutions in the US

Answer 8

Federal Savings and Loan Insurance Corp

Question 9

An independent federal agency that insures deposits at federally insured credit unions, protects the members who own credit unions

Answer 9

National Credit Union Administration

Question 10

A system where banks are only required to keep a fraction of bank deposits on hand

Answer 10

Fractional reserve system

Question 11

The fed requires the bank and other financial institutions to hold a minimum percentage of deposits as reserves

Answer 11

Reserve ratio

Question 12

Fund held at the bank that exceed the federal reserve minimum requirement

Answer 12

Excess reserve

Question 13

Aims to stimulate an economy, by lowering interest rates

Answer 13

Loose Monetary policy

Question 14

Aim to slow down rapid economic growth by raising interest prices

Answer 14

Tight monetary policy

Question 15

The interest rate was federal reserves charges, commercial banks and other financial institutions for short term loans

Answer 15

Discount rate

Question 16

Central bank selling or purchasing securities and the open market in a effort to influence the money supply

Answer 16

Open market operations

Question 17

The delay between when a problem is recognized and when a policy is decided to address it.

Answer 17

Inside time lag

Question 18

The delay between when a policy is made and when its effects are actually seen in the economy

Answer 18

Outside time lag

Question 19

How easily something can be converted into cash

Answer 19

Liquidity

Question 20

Short-term government bonds that are very safe and low-risk

Answer 20

T-Bills

Question 21

The interest rate banks charge their best, most trustworthy customers

Answer 21

Prime lending rate

Question 22

The total value of all goods and services produced in a country in a year.

Answer 22

GPD

Question 23

A measure of the average change in prices consumers pay for goods and services (used to track inflation)

Answer 23

CPI

Question 24

Taxes that businesses pay on their profits

Answer 24

Corporation income taxes

Question 25

A tax paid directly to the government, like income tax

Answer 25

Direct tax

Question 26

Taxes on large amounts of money or property that are inherited or given as gifts

Answer 26

Estate and Gift Tax

Question 27

A tax on specific goods like gasoline, alcohol, or tobacco

Answer 27

Excise Tax

Question 28

A tax on the money individuals earn (like wages or salaries)

Answer 28

Personal income tax

Question 29

A tax added to the price of goods and services when you buy them

Answer 29

Sales Tax

Question 30

A tax taken from paychecks to fund Social Security benefits for retirees and disabled people

Answer 30

Social Security tax

Question 31

A tax on property you own, like a house or land

Answer 31

Property tax

Question 32

When the government spends more money than it brings in from taxes

Answer 32

Deficit

Question 33

Government decisions about taxes and spending to influence the economy.

Answer 33

Fiscal Policy

Question 34

The idea that taxpayers will honestly report income and pay taxes on time without being forced

Answer 34

Voluntary Compliance

Question 35

A system where taxes are taken out of your paycheck throughout the year, rather than paid all at once

Answer 35

Pay as you go

Question 36

An amount you can subtract from your income before calculating how much tax you owe

Answer 36

Deduction

Question 37

A direct reduction in the amount of tax you owe

Answer 37

Credit

Question 38

A review by the IRS or tax authority to check if your taxes were filed correctly

Answer 38

Audit

Question 39

3 goals of the economy

Answer 39

Full employment Maintain value of the dollar Strong steady economy

Question 40

Functions of money 3

Answer 40

It can be saved for later use BUT Must be non-perishable Must hold value over time

Question 41

Functions of money 2

Answer 41

Standard value - provides people with a way to measure the relative value of goods and services by comparing prices

Question 42

Functions of money 1

Answer 42

Medium of exchange - any item that sellers accept as payment for goods and services

Question 43

What to do during inflation or recession

Answer 43

Expansionary/contractionary monetary policy (increase/decrease money supply)