Vocab 1
The general rise of prices over time
Inflation
Name of the Central Bank of the United States
The Federal Reserve/The Fed
Charged to a person who has spent more money than the account has in it
Overdraft Fee
Which part of the check is technically optional?
The Memo Line
How frequently do you receive a bank statement?
Monthly
Identify the 4 most common, primary types of bank accounts and list the accounts in order of liquidity (from top-->bottom, top/first=most liquid, bottom/last=least liquid)
Checking
Savings
MMA
CD
The cost or price paid for using/borrowing someone else's money
Interest
Name of the federal entity that insures the accounts of credit union members
NCUA
Unique, 4-digit number used to access accounts and perform transactions
PIN
The 9-digit number on a check that identifies the bank from which the payment is drawn
Routing #
APY Stands for ____ ____ ____
Annual Percentage Yield
How quickly & easily an asset can be converted into cash
Depository institutions that offer many banking services, are owned by their customers, and have a common bond of membership
Credit Unions
________ : A specific amount of money that a bank or credit union requires in order to open or maintain a particular account
Minimum Balance
In order for a check to be cashed or deposited, the recipient must ____________ in order for the bank to accept it.
Endorse/sign the back
What is the target rate of inflation?
2%
For‐profit depository businesses that offer financial services to both consumers and other businesses
Commercial Banks
Money lent to individuals, organizations, or other entities with the intention of repaying back the principal amount borrowed + interest
Loan
An interest-earning deposit/account that requires the funds to remain deposited for a fixed (long) term and is not very liquid
CD
How long are personal checks typically valid for?
6 Months
What is the name of the federal institution that provides insurance for commercial banks?
FDIC
The initial amount of money borrowed
Principal
The rate set by the federal government's central bank that determines the interest rates at banks
Federal Funds Rate/Prime Lending Rate
An automatic loan from the bank, made to an account, if the current balance will not cover transactions or checks written
Overdraft Protection
The time in between the writing of a check and the money officially being deducted from a checking account
Float Time
1. What is the primary tool that The Fed uses to help control inflation?
2. Explain how they would use that tool in an instance of high or increasing inflation?
1. They would use the Federal Funds Rate (interest rates)
2. If inflation is high or increasing, The Fed will also increase their rate in order to make it more expensive to borrow money and therefore decrease the amount of spending/money in the economy.