Unit 3 Banking and Monetary Policy Vocabulary

A set of 30 vocabulary flashcards covering banking, banking regulations, check processing, and monetary policy based on Unit 3 lecture notes.

Commercial Bank

A for-profit financial institution that provides banking services to individuals and businesses, offering checking and savings accounts, loans, and other financial products to generate revenue for shareholders.

Credit Union

A not-for-profit financial cooperative owned by members, typically serving a specific community or group, offering similar services to banks but with potentially lower fees and better interest rates.

Checking Account

A bank account that allows customers to deposit and withdraw money easily, typically through checks, debit cards, and electronic transfers, used for everyday financial transactions.

Savings Account

A bank account designed to help customers save money, typically offering modest interest rates and limited transaction capabilities to encourage long-term saving.

Certificates of Deposit (CDs)

A financial product where customers deposit money for a fixed term in exchange for higher interest rates, with penalties for early withdrawal.

Money Market Account (MMA)

A type of savings account that typically offers higher interest rates than traditional savings accounts, with limited check-writing privileges and minimum balance requirements.

Loan

A financial arrangement where a lender provides funds to a borrower, who agrees to repay the amount with interest over a specified period.

Money Order

A prepaid financial instrument that guarantees payment, often used as a secure alternative to personal checks.

Safe Deposit Box

A secure storage container rented from a bank to store valuable personal items and important documents.

Automated Teller Machine (ATM)

An electronic banking machine that allows customers to perform financial transactions like withdrawals, deposits, and balance inquiries.

Overdraft Fee

A charge imposed when a customer withdraws more money than available in their account balance.

Monthly Maintenance Fee

A recurring monthly charge by banks for maintaining a checking or savings account.

Stop-Payment Fee

A charge for requesting a bank to cancel a previously issued check before it is processed.

Direct Deposit

An electronic method of receiving payments directly into a bank account, typically used for paychecks and government benefits.

Check Card (Debit Card)

A payment card that allows customers to make purchases and withdraw cash, directly drawing funds from their checking account.

ATM Banking

The process of conducting financial transactions using an automated teller machine.

Automated Clearing House (ACH)

An electronic network for processing financial transactions between banks.

Check 21

A federal law that allows banks to process electronic images of checks instead of physical paper checks.

Regulation D

A Federal Reserve regulation that sets reserve requirements for banks and limits withdrawals from savings accounts.

Regulation Z

A federal regulation governing truth in lending, requiring clear disclosure of credit terms and costs.

Check Register

A personal record of all banking transactions, used to track spending and balance an account.

3 Types of Check Endorsements

1. Blank endorsement 2. Restrictive endorsement 3. Special endorsement

Reconciling a Bank Statement

The process of comparing personal financial records with the bank's monthly statement to ensure accuracy.

The Three Functions of Money

1. Medium of exchange 2. Store of value 3. Unit of account

Federal Reserve System

The central banking system of the United States, responsible for monetary policy and financial stability.

Financial Markets

Platforms where financial assets are bought and sold, including stock, bond, and commodity markets.

Financial Institutions as Intermediaries

Banks and other financial institutions that connect savers and borrowers, facilitating the flow of money in the economy.

Monetary Policy

The actions taken by a central bank to manage the money supply and interest rates.

Expansionary Monetary Policy

Measures designed to stimulate economic growth by increasing money supply and lowering interest rates.

Contractionary Monetary Policy

Actions taken to slow economic growth by reducing money supply and raising interest rates.