Economics - chino.k12.ca.us
Economics
Chapter 10 Section 3 “Banking Today”
P.258-264
Section Focus: ___________________________________________________________
________________________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________________________
Vocabulary:
Money Supply _____________________________________________________
__________________________________________________________________
Liquidity __________________________________________________________
__________________________________________________________________
Demand Deposit ____________________________________________________
__________________________________________________________________
Money Market Mutual Fund __________________________________________
__________________________________________________________________
Fractional Reserve Banking __________________________________________
__________________________________________________________________
Default ___________________________________________________________
__________________________________________________________________
Mortgage _________________________________________________________
__________________________________________________________________
Credit Card ________________________________________________________
__________________________________________________________________
Interest ___________________________________________________________
__________________________________________________________________
Principal __________________________________________________________
__________________________________________________________________
Debit Card ________________________________________________________
__________________________________________________________________
Creditor __________________________________________________________
__________________________________________________________________
Notes
As you read section 3, supply the required information on the lines provided.
Define M1.
1. ______________________________________________________________________
________________________________________________________________________
Define M2.
2. ______________________________________________________________________
________________________________________________________________________
List the five services banks offer.
3. ______________________________________________________________________
4. ______________________________________________________________________
5. ______________________________________________________________________
6. ______________________________________________________________________
7. ______________________________________________________________________
Describe the four types of financial institutions.
8. ______________________________________________________________________
9. ______________________________________________________________________
10. _____________________________________________________________________
11. _____________________________________________________________________
Give an example of each term, or describe how each is important to your life.
12. money supply _________________________________________________________
13. liquidity _____________________________________________________________
14. demand deposit _______________________________________________________
15. money market mutual fund ______________________________________________
16. fractional reserve banking _______________________________________________
17. default ______________________________________________________________
18. mortgage ____________________________________________________________
19. credit card ____________________________________________________________
20. interest ______________________________________________________________
21. debit card ____________________________________________________________
22. creditor ______________________________________________________________
Concept Map
Quiz
Column I Column II
___ 1. device that allows its holder to buy goods based on a. default
a promise to pay b. fractional reserve banking
___ 2. specific type of loan that is used to buy real estate c. mortgage
___ 3. system that keeps only a small part of a deposit on d. credit card
hand and lends out the rest e. debit card
___ 4. failure to pay back a loan
___ 5. device that allows its holder to buy goods and have
the payment deducted from a checking account
Write the letter of the correct answer in the blank provided.
6. What is the difference between simple and compound interest?
a. Simple interest is paid as long as the money stays in the bank; compound interest is only paid for a year at a time.
b. Simple interest is paid once a year; compound interest is paid at least quarterly.
c. Simple interest is paid on the principal only; compound interest is paid on both principal and interest.
d. Simple and compound interest are two names for the same thing.
7. The money supply of a country is made up of which of the following?
a. only the M1 money available in an economy
b. only the M2 money available in an economy
c. all the money available in an economy
d. all the money available in an economy plus money that the country could borrow
8. Why are funds in checking accounts called demand deposits?
a. They are available whenever the depositor writes a check for them.
b. They can be paid to anyone who writes and presents a check for them.
c. They will be paid without a check being drawn if necessary.
d. They are kept without interest by the bank.
9. What is a credit union?
a. a bank that takes deposits but does not make loans
b. a bank that specializes in retirement savings accounts
c. a modified type of savings and loan that makes loans for housing
d. a cooperative lending institution for a particular group
10. How does a bank make most of its profit on its business?
a. by collecting fees on credit card purchases
b. by collecting fees on safety deposit boxes, traveler’s checks, and certified checks
c. by receiving fees from the government for handling federal and state accounts
d. by paying out less in interest on deposits than it earns in interest on loans
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Electronic Banking
Money Supply –
M1 –
M2 -
Measuring
The
Money Supply
Banking Today
Banking
Services
Types of
Financial
Institutions
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