CHAPTER 14: Money and Banking

If the central bank decreases the amount of reserves banks are required to hold from 20% to 10%, then:

_______________________ that require the depositor to commit to leaving their funds in the bank for a certain period of time, in exchange for a higher rate of interest are also called ________________.

________________ serves society in three functions: medium of exchange, unit of account, and store of value.

Which of the following is a valid criticism of the use of money as a store of value in modern economies?

Stealth bank has deposits of $600 million. It holds reserves of $30 million and government bonds worth $80 million. If the bank sells its loans at market value of $400 million, what will its total assets equal?

_______________ are included in the aggregate amount of MI money currently in circulation.

Banks can protect themselves against an unexpectedly high rate of loan defaults and against the risk of ____________________ by adopting a strategy that will ______________.

Stealth bank holds deposits of $600 million. It holds reserves of $30 million and government bonds worth $80 million. The current market value of the bank's loans is $400 million. What is the value of the bank's total liabilities?

____________ is a completely inadequate mechanism ____________________ in a modern advanced economy.

In modern economies, credit cards are a _________________ because of their wide acceptance as a method of payment for both goods and services.

The quantity of money in an economy and the _____________________ are inextricably intertwined.

If Bill performs plumbing upgrades for Alice in exchange for her incorporating his business, then their _______________ will be satisfied.

In macroeconomics, _______________ describes a situation where a bank's liabilities can be withdrawn in the short-term while its assets are being repaid in the long-term.

_____________ are a form of financial instrument through which corporations and governments borrow money from financial investors and promise to repay with interest.

The term ___________________ describes the proportion of deposits that the bank must hold in the form of reserves that are not loaned out or invested in bonds.

If Brent uses his credit card to purchase a new television, then the money to pay the retailer is, initially, taken from:

In uncertain economic times, ____________________ serves as a way of preserving economic value that can be spent or consumed in the future.

The market in which loans are bought and sold is called the:

Stealth bank has deposits of $700 million. It holds reserves of $20 million and has purchased government bonds worth $350 million. The bank's loans, if sold at current market value, would be worth $600 million. What does Stealth bank's net worth equal?

If mollusk shells were accepted as a method of payment in modern-day markets, what economic role would they play in the financial system?

Lance paid $175,000 for his house in 2003 and sold it for $325,000 in 2006. What function did the house serve during the time Lance owned it?

In an economy with _______________, money loses some buying power each year, but it remains money.

__________________ pool the deposits of many investors together and invest them in a safe way like short-term government bonds.

The people in an economy have $10 million in money. There is only one bank that all the people deposit their money in and it holds 5% of the deposits as reserves. What is the money multiplier in this economy?

Which of the following would be classified in the M1 category of the money supply?

If Sarah uses her debit card to purchase movies over the internet, then the money to pay the retailer will come from:

With respect to measuring the money supply, which of the following terms describes a checking account?

The process of banks making loans is intimately tied to the:

Stealth bank has deposits of $700 million. It holds reserves of $20 million and has purchased government bonds worth $350 million. The banks loans, if sold at current market value, would be worth $600 million. What is the total value of Stealth bank's assets?

Stealth bank has deposits of $300 million. It holds reserves of $20 million and has purchased government bonds worth $300 million. The bank's loans, if sold at current market value, would be worth $600 million. What does Stealth bank's net worth equal?

Which of the following is omitted in a barter transaction?

Stealth bank has deposits of $350 million. It holds reserves of $30 million and government bonds worth $70 million. If the bank sells its loans at market value of $400 million, what will its total assets equal?

Which of the following terms is considered to be a narrow definition of the money supply that includes, among other things, currency?

If loans become far less available, then sectors of the economy that __________ like business investment, home construction, and car manufacturing can be dealt a crushing blow.

In macroeconomics, a _______ describes the common way in which market values are measured in an economy.

If Evelyn uses her debit card to buy an iPod, then the money to pay the retailer will come from:

__________ are a form of deposits held in banks that are available to depositors for cash withdrawals, debit card transactions, and writing checks.