Guided Reading and Review – Money and Banking (Chapter 11)
Section 1 – The Evolution of Money
1.
2.
3.
4.
5.
What are the functions of money?
What is a “mutual coincidence of wants”?
What did early colonists in Virginia use for commodity money?
What is the origin of the American dollar?
What traits must money have to be a successful medium of exchange?
Section 2 – Early Banking and Monetary Standards
6.
7.
8.
9.
10.
11.
Under what monetary standard does the U.S. currently operate?
What were the problems with banking before the Civil War?
What are the advantages of a gold standard?
What are the disadvantages of a gold standard?
Why were Greenbacks and U.S. notes issued?
Describe the National Banking System.
Guided Reading and Review – Federal Reserve and Monetary Policy (Chapter 15)
Section 1 – The Federal Reserve System
12.
13.
14.
15.
16.
Who owns the Fed?
Which banks are members of the Fed?
List the parts of the Federal Reserve System
List the regulatory responsibilities of the Fed
What services are provided by the Fed?
Section 2 – Monetary Policy
17. When a bank keeps a percent of deposit as legal reserves, it is using the ______________
system.
18. What does a bank use to make loans?
19. What actions by the Fed promote an easy money policy?
20. What actions by the Fed promote a tight money policy?
21. List the tools of monetary policy.
Guided Reading and Review – Money and Banking (Chapter 11) Section 1 – The Evolution of
Money
1.
2.
3.
4.
5.
What are the functions of money? Store of value, medium of exchange, measure of value
What is a “mutual coincidence of wants”? must be achieved in a barter society, but is difficult
What did early colonists in Virginia use for commodity money? tobacco
What is the origin of the American dollar? The Spanish peso and Austrian taler
What traits must money have to be a successful medium of exchange? Durable, portable, easily
divisible
Section 2 – Early Banking and Monetary Standards
6. Under what monetary standard does the U.S. currently operate? The inconvertible fiat money
standard
7. What were the problems with banking before the Civil War? State banks issued their own
currency, banks issued more currency than they could back, wildcat banks printed large
amounts of currency
8. What are the advantages of a gold standard? The government cannot print too much paper
currency, people feel more secure about their money
9. What are the disadvantages of a gold standard? The government risks draining its gold reserves
10. Why were Greenbacks and U.S. notes issued? Mainly to raise money to finance the Civil War
11. Describe the National Banking System. Was made up of banks chartered by the federal
government, resulted in shifting the paper money supply from being entirely privately-issued to
being entirely publicly-issued, eventually replaced state-chartered banks
Guided Reading and Review – Federal Reserve and Monetary Policy (Chapter 15)
Section 1 – The Federal Reserve System
12. Who owns the Fed? Member banks owned by the people
13. Which banks are members of the Fed? ALL national banks and SOME state banks
14. List the parts of the Federal Reserve System Board of Governors, Advisory Committee (Council),
Federal Advisory Committee (Council)
15. List the regulatory responsibilities of the Fed regulate holding companies, approving bank
mergers, supervising foreign banks in the U.S.
16. What services are provided by the Fed? Check clearing, enforcing consumer legislation,
maintaining currency and coins
Section 2 – Monetary Policy
17. When a bank keeps a percent of deposit as legal reserves, it is using the fractional reserve
system.
18. What does a bank use to make loans? Excess reserves
19. What actions by the Fed promote an easy money policy? Lowering the discount rate, buying
government securities, announcing that it anticipates adopting an easy money policy
20. What actions by the Fed promote a tight money policy? Increasing the reserve requirement,
Having an official testify to Congress that a tight money policy is likely, selling government
securities
21. List the tools of monetary policy. Selective credit controls, moral suasion, open market
operations