________ is the practice of holding only a fraction of the money deposited in a bank and lending the rest.
Fractional reserve banking
A _______ is a bank chartered by a state government.
state bank
______was a leading Federalist who believed in a strong central government. Argued that the Constitution implied that the federal government had the authority to create a national bank to carry out its duty to regulate currency.
hamilton
The government’s first solution to this problem was to issue a new currency backed by government bonds. These U.S. bank notes were called
greenbacks
The ______ is a system that backs the basic monetary unit with a set amount of gold.
gold standard
is anything that people will accept as payment for goods and services.
money
Money performs three important functions:
Medium of Exchange
Standard of Value
Store of Value
is a means through which goods and services can be exchanged.
medium of exchange
determines the economic worth in the exchange process.
A standard of value
is something that holds its value over time.
A store of value
The four physical properties of money:
Durability
Portability
Divisibility
Uniformity
The three economic properties of money:
Stability of Value
Scarcity
Acceptability
derives its value from the type of material from which it is composed.
Commodity Money
is paper money back by something tangible- gold or silver- that gives its value.
Representative money
The earliest forms of representative money were seen in the
MIddle Ages
The value of the U.S. dollar was linked to the value of gold until ______.
1971
Checking accounts are called
demand deposits
is savings accounts, and time deposits that can be converted into cash relatively easily.
near money
_________ accounts, are interest- bearing saving accounts against which drafts may be written.
Negotiable order of withdrawal (NOW)
are funds that people place in a financial institution for a specific period of time in return for a higher interest rate which are often placed in a certificate of deposit (CD)
Time deposits
__________ place restrictions on a number transactions you can make in a month and require you to maintain a certain balance in the account in order to receive higher rate of interest.
Money market accounts
is the narrowest measure of the money supply, consisting of currency, demand deposits, and other checkable deposits.
M1
Modern banking arose in _______ in the late Middle Ages.
Italy
is the practice of holding only a fraction of the money deposited in a bank and lending the rest.
Fractional Reserve Banking
was the Secretary of Treasury in 1789
Alexander Hamilton
The act provided for a national currency backed by ________ bonds and regulated the minimum amount of capital required for national banks a well as the amount of reserves necessary to back the currency.
U.S. Treasury
In _____, the government officially adopted the gold standard.
1900
is a system that backs the basic monetary unit with a set amount of gold.
gold standard
The fed consists of ______ regional banks with a central decision
12
The ________ provides financial services to the federal government makes loans to banks that serve the public, issues Federal Reserve notes as the national currency, and regulates the money supply to ensure that money retains its purchasing power
Federal Reserve Act
______ installed reforms such as regulating interest rates that banks could not pay and prohibiting banks from selling stock
Banking Act
________ provided federal insurance so that if a bank failed people would no longer lose their money
Federal Deposit Insurance Corporation
The term _______ is used to refer to almost any kind of financial institution that takes in deposits and makes loans helping individuals, businesses, and governments to manage their money
bank
All financial institutions receive a ______ from the government, either state or federal
charter
are the oldest form of banking and are the financial institutions most commonly thought of as a bank
Privately owned commercial banks
_______ were initially established to provide loans to businesses
Commercial banks
provide a wide range of services, including checking, savings, loans, investment assistance, and credit cards to both businesses and individual consumers
Commercial Banks
________ led to a wave of mergers and consolidations, reducing the number of commercial banks from over 12,000 in 1990 to about 7,500 in 2005
Deregulation
_____ insures all commercial banks based in the United States
FDIC
All national commercial banks belong to the ______.
Federal Reserve System
The first credit union in the United States began in _______ as state-chartered institutions
1909
The ________ of 1934 created a system of federally chartered credit unions.
Federal Credit Union Act
Most credit unions have deposits insurance through the _______ an organization similar to the FDIC. The major difference between credit unions and other financial institutions is that credit unions have membership requirements.
National Credit Association
_______ are places where money can be bought and sold.
Banks
Most common loan a bank makes is a ______
mortgage
A _______ is a contract a corporation issues that promises to repay borrowed money, plus interest, on a fixed schedule.
bond
______ has changed the way customers use banks,producing a system generally referred to as electronic banking.
technology
________ are the oldest and most familiar of the developments in electronic banking.
ATMs
Debit cards are sometimes called
check cards
Store valued cards are sometimes called _____.
prepaid cards
________ is a crime in which one person fraudulently uses another’s identity to obtain credit or to access financial accounts. Can be accomplished easily and there is little risk of getting caught.
Identity theft
_______ is the measure of your dependability to repay a loan.
Creditworthiness
______ is a measure of your financial responsibility.
Character
_______ is a measure of a consumer’s ability to repay a debt on time.
Capacity
A person’s record of paying bills and debts over time is one’s ________.
credit history
________ is based off making payments on time, current debt, other credit history, recent applications for credit, and type of credit used.
Credit Rating
______ is a system that assigns a number, or score, to each consumer indicating whether this person is a good or bad credit risk.
Credit Scoring