Integrated Social Studies
Name___________________________________ Period_________
Study Guide for Civics Chapter 24-Money and Banking
Chapter 24 – Terms to Know
Coins-metallic forms of money
Currency-Includes paper or coin forms of money
Commercial Banks-Financial institutions that offer full service to individuals or businesses.
Savings and Loan Institutions-Financial institutions that traditionally loan money to people buying homes.
Credit Unions-Not-for-profit institutions open only to members of the group that sponsors them.
FDIC- Federal Deposit Insurance Corporation – Insures deposits of individual accounts
Central Bank-The Fed is the US central bank. This is where banks go to borrow money.
FOMC-Federal Open Market Committee – Makes Decisions that affect the economy by manipulating the
money supply
Monetary Policy-Involves controlling the supply of money and the cost of borrowing money according to the
needs of the economy.
Discount Rate-The rate of interest that the Fed charges member banks.
Checking Account-A deposit account that allows customers to write checks or use check cards.
Savings Account-An account where banks pay interest to the customer based on how much money is deposited.
Certificates of Deposit (CDs)-Customers loan banks money for a specific period of time and get a higher
interest rate.
Questions
What are the three functions of money? (524) Medium of exchange, store value, measure of value
What are three forms of money? (252) Coins, Paper Money, and bank accounts
Why does money have value? (525) Because we are absolutely sure that someone else will accept its value
How does a financial institution cover its costs and make a profit? (525) Loans money to other customers and
charges interest on the loans.
What two factors make the US financial system one of the safest in the world? (526) Regulation and Insurance
Who owns the “Fed”? (529) Member BAnks
What are the two main regulatory functions of the Fed? (531) Banking Regulation & Consumer Credit
Integrated Social Studies
Name___________________________________ Period_________
Study Guide for Civics Chapter 24-Money and Banking
What are the three ways the Fed acts as the government’s bank? (531) 1. Holds the government’s money 3.
Sells US Bonds and Treasury bills. 3. Issues currency.
Why do people put money in Certificates of Deposit? (535) Banks usually pay higher interest rates on a CD.
What is one of the principal activities of a bank? (535) lend money to business and consumers
What happened to the first two federal “Banks of the United States”? (536) Charters allowed to lapse.
After the end of the Second Bank of the US, who chartered all banks in the United States?(536) The States
When did the federal government start printing paper money? (536) During the Civil War.
When did the Federal Reserve start issuing paper money called Federal Reserve Notes? (536) 1914
What does the FDIC do? (537) Insures funds of individual depositors in case of bank failure.
What is the difference between a Credit Card and a Debit Card? (537) Credit Card debt can be paid back to the
credit card company over a period of time. Debit Cards take money directly out of your own checking account.