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Chapter 14 B. Econ
| Question | Answer |
|---|---|
| System Requiring financial institutions to set aside a fraction of their deposits in the form of reserves | fractional reserve |
| Moneyless economy that relies on trade or barter | barter |
| money that has an alternative use as an economic good | commodity |
| paper currency backed by, and redeemable for, silver from 1878 to 1968 | silver certificate |
| paper currency backed by gold and issued between 1863 and 1934 | gold certificate |
| lowest rate of interest rate that banks charge their best customers | prime rate |
| bank that can lend money to other banks in times of need | central bank |
| formula used to compute the amount of a depository institutions required reserves | reserve requirement |
| the price of credit to a borrower | interest rate |
| money by the government decree | fiat |
| reserved kept by member banks at the Fed to satisfy reserve requirments | member bank reserve |
| bank that receives its charter from the state in which it operates | State bank |
| provision extending truth in lending disclosures to consumers | regulations |
| bank belonging to the federal reserve system | member |
| actions by the federal reserve system to expand or contract the money supply in order to affect the cost and availability of credit` | monetary policy |
| fiat currency that must be accepted for payment by decree of the government | legal tender |
| paper currency issued by the Fed in use today | federal reserve notes |
| financial institutions cash, currency, and reserves not needed for reserve requirements | excess reserves |
| account from which funds can be removed by writing a check and without having to gain prior approval from the depository instituion | demand deposits |
| money in the form of gold and silver coins | specie |
| paper component of the money supply | currency |
| hypothesis that the supply of money directly affects the price level over the long run | quantity theory of money |
| brief period during which all banks are closed to prevent bank runs | bank holiday |
| currency and deposits used to meet the reserve requirment | legal reserves |
| commercial bank chartered by the national banking system | national bank |
| privately owned, publicly controlled, central bank of the united states | federal reserve system |
| sales or purchases of U.S government securities by the Fed | open market opertations |
| interest rate that the Fed charges on loans to the nations financial institutions | discount rate |
| monetary policy that results in lower interest rates and greater access to credit | easy money |
| monetary policy that results in higher interest rates and restricted access to credit | tight money |
| currency back by the government bonds and issued by commercial banks in the national banking system | national |
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