In referring to the money supply, which of the following is money that can be accessed quickly and easily, and includes coins and paper money as well as checks?

M-1 is money that can be accessed quickly and easily. It includes coins and paper money, checks, and traveler’s checks.

If the Fed were to increase the reserve requirement, which of the following would occur?

The reserve requirement is a percentage of commercial banks’ checking and savings accounts that must be physically kept in the bank. If the Fed were to increase the reserve requirement, then the banks would have to increase the amount of money that was physically kept in the bank, reducing the amount the banks could lend out. The money supply would be reduced and prices would likely fall.

If the government or its representative agency were to take money out of the economy, which of the following might occur?

Similar to the supply and demand for other products and services, if money is removed from the economy, there is less to spend. Products and services that are already produced would lose value.

When the Fed buys and sells U.S. government bonds in an effort to regulate the money supply, it is engaged in ________.

Open-market operations is the buying and selling of U.S. government bonds by the Fed with the goal of regulating the money supply. This is a very commonly used tool by the Federal Reserve System.

If the economy of a nation such as Greece is faltering, the value of its associated currency, the euro, is likely to ____.

The strength of an economy’s currency is positively correlated with the strength of the nation’s economy. It is likely that if Greece is having economic problems, the strength of the euro (as a member of the European Common Market) will also be affected.

Too much money chasing too few goods is characterized by the term ________.

The saying, “too much money chasing too few goods,” refers to a situation where there is full employment and people have more money to spend on available goods and services. The price of goods and services eventually increases to compensate for the high demand from consumers.

An increase in the discount rate would have the effect of ________.

The discount rate is the interest rate the Fed charges its member banks when they borrow money from the Federal Reserve Bank. If the Fed decides to curb inflation and reduce the supply of money in the economy, it will increase the discount rate. Member banks will increase the rate they charge individuals and businesses for loans. Fewer loans will be issued. It will tighten the money supply.

The bank failures of 1907 and the resulting cash shortage problems led to the creation of:

The Federal Reserve System was formed in 1907 and under the Federal Reserve Act of 1913, all federally chartered banks had to join. The Fed became the bankers’ bank.

The bank failures that were occurring in 1930s due to the effects of the Great Depression led to the creation of:

One of the most important pieces of legislation to protect the banking industry was the passing of federal deposit insurance during the 1930s to further protect the public from bank failures.

The technical name for a savings account is a:

A time deposit is the technical name for a savings account; the bank can require prior notice before the owner withdraws money from a time deposit.

Competition between banks and nonbanks, such as insurance companies and pension funds, has:

Competition between banks and nonbanks has increased because nonbanks offer many of the services provided by regular banks.

Which of the following organizations would be considered a nonbank institution?

Nonbanks are financial organizations that accept no deposits but offer many of the services provided by regular banks. Nonbanks include life insurance companies, pension funds, brokerage firms, commercial finance companies, and corporate financial services.

Funds in savings and loan institutions are protected by:

The Savings Association Insurance Fund at one time was called the Federal Savings and Loan Insurance Corporation (FSLIC). In the 1980s to get more control over the banking system the government placed the FSLIC under the control of the FDIC and changed its name to the Savings Association Insurance Fund.

Most commercial banks offer their depositors protection. At this time, bank deposits are insured by the FDIC (Federal Deposit Insurance Corporation) up to ________.

Currently, the FDIC insures each deposit for up to $250,000.

One of the newest electronic conveniences is the ________, which can serve as a credit card, a debit card, and even unlock doors. RFID technology and GPS technology are used in some of these.

Smart cards serve as debit cards, credit cards, and as tools to unlock doors, pay bills, and more. Some are embedded with RFID technology or other chips that allow vendors to read balance amounts and other purchasing information.

Online banking:

All top U.S. retail banks now allow customers to access their accounts online and most have bill-paying capabilities. It’s expected traditional banks will continue to offer both online services and brick-and-mortar facilities so customers can have the best of both possibilities.

A ________ is a way of conducting business in global markets that promises a bank will pay some specified amount at a particular time, with no specific conditions imposed.

A banker’s acceptance promises that the bank will pay some specified amount at a particular time.

The ________ focuses on economic development throughout the world, with emphasis on emerging economies.

The World Bank is primarily responsible for financing economic development. It is also known as the International Bank for Reconstruction and Development.

Cooperative monetary policies designed to stabilize currency exchanges among 188 countries are coordinated through which of the following organizations?

The International Monetary Fund (IMF) was established to foster cooperative monetary policies that stabilize the exchange of one national currency for another.