BUSI - Ch. 15 (Understanding Money and Financial Institutions)

The Federal Deposit Insurance Corporation (FDIC) insures deposits in commercial banks. The FDIC was created by the:

Banking Act of 1933

Nondepository Financial Institutions

Other types of financial institutions that offer banking services Do not accept deposits consumer finance company brokerage firm pension fund commercial finance company

Which of the following is an example of a depository financial institution?

credit union

Cupcakes, hamburgers, and cut flowers would not make good mediums of exchange because they lack the key characteristic of:

durability

Money

Any object or objects that a group of people use to buy and sell goods and services

Which federal agency is responsible for processing and clearing checks between financial institutions?

Federal Reserve

The most important function of the Federal Reserve System is carrying out ______ policy.

Monetary

Money is used as:

a store of value a means of payment a medium of exchange a standard of value

The purchase or sale of U.S. government bonds by the Federal Reserve to stimulate or slow down the economy is called:

an open market operation

Financial intermediation is the process in which:

financial institutions act as intermediaries between the suppliers and demanders of funds

The three principal tools of the Federal Reserve System are:

reserve requirements, discount rate, and open market operations

Items that groups of people use as money must be _____ to be acceptable mediums of exchange.

scarce, divisible, portable, and durable