Student Chapter 10
Money and Banking
Section 1
Money
pg. 243 – 248
1. What is money and its three uses?
2. Define medium of exchange.
3. Define barter.
4. Define unit of account.
5. Define store of value.
6. Define currency.
7. Explain the six characteristics of money.
8. Define commodity money. Give examples.
9. What are the disadvantages of commodity money?
10. Define representative money.
11. Why did Continentals become worthless?
12. Define fiat money.
13. How does the U. S. government control the fiat money (legal tender)?
Section 2
The History of American Banking pg. 250 – 256
14. Define bank.
15. Define national bank.
16. What was the purpose of the first Bank of the United States?
17. What were the concerns about the First Bank of the United States?
18. Identify bank runs.
19. Define greenbacks.
20. What were three results of the National Banking Acts of 1862 and 1864?
21. Define gold standard.
22. What was the importance of this gold standard to the economy of the U. S.?
23. What led to the government’s decision to reinstate a central bank?
24. Identify Federal Reserve System.
25. What can a central bank do?
26. How was the federal banking systems reorganized?
27. What was the Great Depression?
28. What was the purpose of Roosevelt’s “bank holiday?”
29. Explain the purpose of the Federal Deposit Insurance Corporation (FDIC)?
30. What restrictions were placed on banks from 1933 through the 1960s?
31. What factors contributed to the crisis in Savings and Loans banks?
32. What has been the trend for banks in the 1990s and 2000s?
Section 3
Banking Today
pg. 259 – 264
33. What makes up the money supply in the U. S.?
34. What is the difference between M1 and M2? Give an example of each.
35. Define liquidity.
36. Define demand deposit.
37. Define money market mutual funds.
38. What are the four most common ways banks offer customers to save money?
39. How do money market accounts and certificate of deposits work?
40. Identify fractional reserve banking.
41. Page 260 Figure 10.6 The Fractional Reserve System Why does the bank retain a
percentage of the money it receives from depositors?
42. Define default.
43. What is a mortgage?
44. What is a credit card?
45. Define interest.
46. Define principal.
47. Define compound interest.
48. Page 261 Figure 10.7 Compound Interest How many years does it take for the
original deposit to double?
49. How do banks make money?
50. What financial institutions operate in the U. S. ?
51. What role do commercial banks play?
52. What are credit unions?
53. What kind of business do finance companies offer and why are charges higher than
other institutions?
54. What are ATMs?
55. How does a debit card differ from a credit card?
56. Define creditor.
57. What are stored value cards or smart cards? Give example.
Study Guide Chapter 10
What are the three uses of money?
Barter
Currency
Commodity money
Fiat money
Bank runs
Federal Reserve System
Explain the purpose of the Federal Deposit Insurance Corporation.
What factors contributed to the crisis in Savings and Loan banks?
What makes up the money supply?
What is the difference between M1 and M2
Liquidity
Money market mutual funds
What is the largest source of income for banks?
Fractional reserve banking
Default
Mortgage
Credit card
Interest
Principal
What kind of business do finance companies offer and why are charges higher than other institutions?
How does a debit card differ from a credit card?