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Chapter 24 test
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Terms in this set (24)
metallic form of money such as pennies, nickels, and dimes
both coins and paper money
a financial institution that offers full banking services to individuals and businesses
savings and loan associations (S&L)
financial institutions that traditionally loaned money to people buying homes
nonprofit service cooperative that accepts deposits, makes loans, and provides other financial services
Federal Deposit Insurance Corporation (FDIC)
federal agency that insures individual accounts in financial institutions for up to $100,000
What are the 3 functions of money?
1. medium of exchange 2. store of value 3. measure of value
what are the 2 most familiar types of money today?
1. coins 2. currency
what is the simple reason that we value and except money?
we are absolutely sure that someone will accept its value as well
an institution that lends money to other banks
Federal Open Market Committee (FOMC)
the most powerful committee of the Fed, because it makes the decisions that affect the economy as a whole by manipulating the money supply
policy that involves changing the rate of growth of the money supply in circulation in order to affect the cost and availability of credit
the interest rate the Fed charges on its loans
a certain percentage of deposits that banks have to set aside as cash in their own vaults or as deposits in their Federal Reserve district bank
open market operations
purchase or sale of U.S. government bonds and Treasury bills
what are the 2 regulatory functions of the Fed?
1. oversees many large commercial banks 2. enforces many laws that deal with consumer borrowing
How does the Fed act as the government's bank?
1. it holds the governments money 2. the fed sells U.S. government bonds and treasury bills, which the government uses to borrow money 3. the Fed issues the nations currency, including paper money and coins
3 reasons that the Monetary Policy can be implemented efficiently.
1. can move quickly 2. can fine-tune its policy 3. can watch the results of selling bonds or raising the discount rate
an account in which deposited money can be withdrawn at any time by writing a check
an account in which customers receive interest based on how much money they have deposited
Certificate of Deposit (CD)
timed deposit that states the amount of the deposit, maturity, and rate of interest being paid
what did the National Banking Act do?
corrected some of the weaknesses of the pre-Civil War banking system
What does the Federal Reserve do?
controls the money supply
what was the Gramm-Leach-Bliley Act?
permits bank holding companies greater freedom to engage in full range of financial services, including banking, insurance, and securities
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