Chapter 12 quiz

if you are estimating your total expenses for school next semester, you are using money primarily as

unit of account

How many federal Reserve Bank districts are there?

12

The FOMC (Federal Open Market Committee) is made up of the FED Chairman and the other members of the Board of Governors, the president of the — district bank, and four other district bank presidents on a rotating basis.

New York

The Board of Governors members, including the FEDChair, are appointed to — year terms

14

M1, the narrowest definition of the US Money supply includes currency in the hands of the public and —

checkable deposits

M2 includes M1 and —, which include savings deposits, money market deposits, CDs, and money market mutual funds.

savings

MZM, as measured by the St. Louis Federal Reserve bank, excludes money that would be considered a — deposit because it would necessitate a penalty to access immediately.

time

On all US currency notes is a phrase, “This note is — for all debts public and private”

legal lender

As of 1934 or 1971 (depending on whom you ask). what backs our money?

full faith + credit clause

— is a company (owned by Ebay) that is a very recent example of the expansion of electronic use of money in everyday transactions`

paypal

money as a medium of exchange

provides a convenient way of exchanging goods; money is usable for buying and selling goods and services

unit of account

monetary unit; society uses monetary units - dollars in the US as a yardstick for measuring the relative worth of a wide variety of goods, services and resources.

store of value

money functions as a store of value that enables people to transfer purchasing power from the present to the future. people normally store their wealth in either a safe or checking account.

money is the most — of all assets

liquid (spendable)

money is a stock

income which is a flow

M1 (narrowest definition) includes — in the hands of the public and all —

currency (coins and paper money) and all checkable deposits (all deposits in commercial banks and “thrift” or savings institutions on which checks of any size can be drawn.

token money

all coins in circulation in the United States

federal reserve notes

most of the nations currency is paper money; this “folding currency” consists of federal reserve notes issued by the federal reserve system (the US central bank) with the authorization of Congress.

checkable deposits

a large component of the M1 supply

checks

nothing more than a way to transfer the ownership for the deposits in banks and other financial institutions and are generally acceptable as a medium of exchange.

commercial banks

primary depository institutions

commercial bank loans

provide short term financial capital to businesses, and they finance consumer purchases of automobiles and other durable goods.

thrift institutions

known as savings and loan associations, mutual savings banks, and credit unions which supplement commercial banks

• savings and loan associations and mutual savings banks accept the deposits of households and businesses and then use the funds to finance housing mortgages and to provide other loans.

  • credit unions accept deposits from and lend to “members,” who usually are a group of people who work for the same company.

what are the checkable deposits of banks and thrifts known as?

• demand deposits

• NOW(negotiable order of withdrawal) accounts

• ATS(automatic transfer service) accounts

• share draft accounts

(depositors can write checks on them whenever, and in whatever amount they choose)

near monies

certain highly liquid financial assets that do not function directly or fully as a medium of exchange but can be readily converted into currency or checkable deposits.

M2 definition of money (5x M1)

M1 + near monies

• savings deposits, including money market deposit accounts (depositor can easily withdraw funds from a savings account at a bank or thrift or request that funds be transferred from a savings account to a checkable account)

  • money market deposit —> interest bearing account.minimum balance requirement and a limit on how often a person can withdraw funds

• small time deposits (less than 100,000): fund from time deposits become available at their maturity.

• money market funds held by individuals : makes a call, using the internet, or writing a check, a depositor can redeem funds from the money market mutual fund offered by a mutual fund company.

MZM

money zero maturity

• excludes time deposits

what gives money its value

• acceptance

• legal tender - “this note is a legal tender for all debts,public and private”

• relative scarcity

germany

government issued so many pieces of paper currency that the purchasing power of each of those units of money was almost totally undermined.

board of governers

the central authority of the us money and banking system

who appoints the fed board

the president appoints 7 board members with the confirmation of the senate

• terms are 14 years and staggered so one gets replaced every 2 years

how many federal banks are there

12

who have central single banks

england and or Japna

quasi public banks

blend private ownership and public control

fed functions

• issuing currency

• setting reserve requirements and holding reserves

• lending money to thrifts and banks

• providing for check collection

• acting as a fiscal agent

• supervising banks

• controlling the money supply

what happened in 1980

banks and thrifts together held nearly 60 percent of financial assets in the US. By 2005, the percentage had declines to about 24 percent

meal service care

stored value cards