Money Basics
This is anything widely accepted for goods and services.
What is money?
Early bankers who stored gold and issued receipts.
Who were goldsmiths?
This is the price of borrowing money.
What is interest?
The central bank of the United States.
What is the Federal Reserve?
This is the Fed's control of money supply and interest rates.
What is monetary policy?
This type of money must be accepted by law.
This system allows banks to lend out a percentage of deposits.
What is fractional reserve banking?
People who supply money in financial markets.
Who are savers?
This group sets major policies and oversees the Fed.
What is the Board of Governors?
Policy that increases money supply and lowers rates.
What is expansionary policy?
This function of money allows you to compare prices.
What is a measure of value or unit of account?
If the reserve requirement is 10%, how much is kept from $1,000?
What is $100?
When demand for loans increases, interest rates do this.
What is increase?
This group controls monetary policy and open market operations.
What is FOMC?
If money supply increases too much, this happens.
What is inflation?
This function allows money to be saved for later use.
One risk of fractional reserve banking.
What is bank runs/not enough reserves/inflation?
Give one reason lenders charge interst.
Risk/time/inflation
How many Federal Reserve district banks are there?
What is 12?
If money supply increases too much, this happens.
What is inflation?
This type of money has value because of government decree.
What is fiat money?
Why did goldsmiths receipts become money?
Because people trusted them and used them for exchange.
Name one factor that affects interest rates.
Why is the Fed independent?
To avoid political pressure/maintain stability
This is the tradeoff the Fed faces.
Growth vs Inflation (or unemployment vs. inflation)