Terms in this set (31)
What is a mortgage used to purchase?
What occurred during the Free Banking Era?
Currency varied widely from state to state.
The paper money used in the United States is:
Federal Reserve Notes.
Which of the following is a financial intermediary?
What is the gold standard?
A system in which a country's money is backed with gold.
Which of the following correctly defines money as a unit of account?
It provides a means for comparing the values of goods and services
Which of the following is an example of a barter system?
Instead of paying rent, you clean the house for the owner.
What condition is necessary for a fiat money system to work?
The government must control the money supply.
What is the largest source of income for banks?
the interest they receive from loans
How did the Federal Reserve System improve the banking industry in the twentieth century?
It served as a central bank with the power to lend to other banks in time of need.
What happens during a bank run?
More customers withdraw money than the bank has on hand
Which of the following was NOT a cause of the Savings and Loan crisis of the 1980s?
the gold reserve act
Which of the following is an important power given to the federal government by the National Banking Acts of 1863 and 1864?
the power to charter banks
Which of the following is NOT an example of a liquid asset?
a certificate of deposit
What happens when you make a purchase using a credit card?
The credit card issuer pays the store.
When economists say that money serves as a store of value, they mean that it is:
a way to keep wealth in a readily spendable form for future use.
What did the Federalists believe about banking?
They believed that a centralized banking system was necessary.
Which of the following is an example of representative money?
an IOU note
Which of the following is NOT an example of M1 money?
a mutual fund
If you place a part of your summer earnings in a savings account, you are using money primarily as a:
store of value
In the Unites States, the money supply (M1) is comprised of:
coins, paper currency, and checkable deposits.
Which of the following happens when you use your debit card at a machine designed to read it?
Your card sends a message to your bank to transfer money from your checking account directly into the store's bank account.
If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as:
a medium of exchange.
Why is using coins as money easier than using gold bars?
coins are more portable
Which of the following is the main disadvantage of using shells as money instead of coins?
Money functions as:
a medium of exchange.
a store of value.
unit of account.
One of the six characteristics economists use to judge how well an item serves as currency is divisibility. What does this concept mean?
Money must be easily divided into smaller denominations
Which of the following is an example of money as a unit of account?
checking the price of a camera at several stores before buying it at the lowest price
What were "greenbacks"?
commodity money used by the Union during the Civil War
What is the purpose of the Federal Deposit Insurance Corporation (FDIC)?
to make sure that customers do not lose money if a bank fails
What type of financial service offered at commercial banks, savings and loan associations, and credit unions is also offered at financial companies?
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