Class 10

the impact of a falling dollar

- U.S. tourism increases which is good for hotels, resorts, theme parks, and retailers that serve international travelers. - Overseas demand for U.S. products rise. - A favorable exchange rate for U.S. companies increases profits in foreign markets.

the five major parts of the federal reserve

1. board of governors 2. federal open market committee (FOMC) 3, 12 federal reserve banks 4. 3 advisory councils. 5. member banks of the system

demand deposit

A checking account; money can be withdrawn anytime on demand from the depositor.

smart card

A combination of a credit card, debit card, phone card, driver's license, and more.

electronic funds transfer (EFT) system

A computerized system that electronically performs financial transactions such as making purchases, paying bills, and receiving paychecks.

Which statement about a falling dollar value in the global market is correct? A falling dollar value means the amount of goods and services you can buy in the global market increases. A falling dollar value means you cannot buy as many goods and services in the global market. A falling dollar value means that there will be less goods available to buy in the global market. A falling dollar value means that there will be more goods available to buy in the global market.

A falling dollar value means the amount of goods and services you can buy in the global market increases.

savings and loan association

A financial institution that accepts both savings and checking deposits and provides home mortgage loans.

commercial bank

A profit-seeking organization that receives deposits from individuals and corporations in the form of checking and savings accounts and then uses some of these funds to make loans.

Certificate of Deposit

A savings account that earns interest, to be delivered on the certificate's maturity date.

time deposit

A savings account; a bank can require a prior notice before you make a withdrawal.

Federal Deposit Insurance Corporation (FDIC)

An independent agency of the U.S. government that insures bank deposits up to $250,000

money

Anything people generally accept as payment for goods and services.

open market operations

Buying & selling government bonds by the fed with the goal of regulating the money supply

the U.S. Banking System consists of

Commercial banks Savings and loan associations Credit unions Nonbanks

Services to Borrowers

Loans are given on the basis of the recipient's creditworthiness.

M2 money supply

M1 plus money that may take a little more time to obtain (savings accounts, money market accounts)

M3 money supply

M2 plus big deposits like institutional money market funds

M1 money supply

Money that can be accessed quickly (coins, paper money, travelers' checks, etc.).

Credit Unions

Nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members.

Standards for a useful form of money

Portability Divisibility Stability Durability Uniqueness Electronic money

debit card

Serves the same function as a check; it withdrawals funds from a checking account.

falling dollar value

The amount of goods and services you can buy with a dollar decreases.

rising dollar value

The amount of goods and services you can buy with a dollar increases.

money supply

The amount of money the Federal Reserve Bank makes available for people to buy goods and services.

barter

The direct trading of goods or services for other goods or services.

what led to the creation of the Federal Reserve System?

a cash shortage problem in 1907

A major problem during the Great Depression created by a weak banking system was Blank______.

a run on and closure of many banks

The check clearing role of the Federal Reserve allows:

banks to settle the check payments between banks in different parts of the country

Open-market operations consist of the buying and selling of government _____

bonds

Major duties of the Federal Reserve include ______. buying and selling government securities collecting data on money policy making loans to foreign governments setting reserve requirements

buying and selling government securities collecting data on money policy setting reserve requirements

The Federal Reserve banks provide the ______ function for checks written across states.

check-clearing

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

Which is a profit seeking organization that has both depositors and borrowers and is equally responsible to both?

commercial banks

The methods the Federal Reserve uses to manage the economy include all except ______.

control the federal budget

what services are provided by commercial banks?

demand deposit time deposit certificate of deposit services to borrowers

a commercial bank has two types of customers

depositors and borrowers

The interest rate the Federal Reserve charges for loans made to its member banks is called the _____ rate.

discount

What can the size of the money supply affect?

employment and economic growth or decline

When the Federal Reserve buys and sells government bonds it is ______.

engaging in open market operations

Credit unions are exempted from...

federal income taxes since it is a nonprofit

Nonbanks

financial organizations that accept no deposits but offer many of the services provided by regular banks (pension funds, insurance companies, commercial finance companies, consumer finance companies, and brokerage houses)

The amount of goods and services you can buy with a dollar in the global market ______.

increases with a rising dollar value

"too much money chasing too few goods"

inflation

If the Federal Reserve suddenly vastly increased the amount of money in circulation, it could lead to ______.

inflation

discount rate

interest rate that the fed charges for loans to member banks

As a result of the Great Depression, Congress established deposit insurance to ______.

make sure depositors did not lose money in a bank failure

reserve requirement

percentage of commercial banks' checking and savings accounts that must be physically kept in the bank

The discount rate is the ______.

percentage of deposits that banks must hold in reserve

The primary reason for the creation of the Federal Reserve was to ______.

prevent another crisis of bank failures

Deflation

prices go down because of a surplus of goods and services compared to money

The _____ _____ is a percentage of commercial banks' checking and savings accounts they must keep in the bank.

reserve requirement

Throughout the history of the United States, central banks were created and disbanded with much controversy until ______ ensured that a central bank was needed.

the bank panic of 1907