ECONOMICS: Chapter 14 Questions – Money and Banking

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14.1: The Functions and Characteristics of Money	

1.	 Name and explain the three functions of money.

2. 	Why is it important for money to be durable?

3. 	What is Representative money?

4. This refers to anything used as a medium of exchange, unit of accounting or store of value. 

5. This is money that has value solely due to government order.

6. The use of money to save purchasing power for later use is known as this.

7. This term refers to money that must be accepted for public and private debts.  

14.2: History of American Money and Banking

8. 	Why was the FDIC created?

9.	Why was the Federal Reserve System established?

10. Transferring money from one bank to another without any cash actually changing hands is known as this.

11. What is overdraft checking?

14.3: types of Money in the United States

12. 	Where are coins in the United States made?  Where is our paper money made?

13. What is included in near moneys?

14.	 Refer to Figure 14.4 on pages 380-381. Compare the check register and the bank statement.

    How many checks have cleared?

    What check numbers have not yet cleared?

    What does “SC” on the statement stand for? Where should you record it? Why?

15. 	Whose money are you using when you use a credit card?

16. This is an account that deposited funs can be withdrawn from at any time by writing a check.

17. Assets that can be turned into money relatively easily, such as a saving account, are known as this.

18. This is a card used to make cashless purchases in which money is withdrawn directly from your own account.

19. This is a card used to make cashless purchases in which the money is borrowed from the issuing bank.

20. What is a thrift institution? Give several examples.

21. What do M1 and M2 refer to?

22. Describe the difference between M1 and M2?