Review of Chapter 2

1
Review of Chapter 2

• Development of U.S. Banking

2

• In Colonial America, what was the most common
  medium of exchange?
• Coins

3

• What is the largest denomination of paper
  currency in the U.S. today?
• One hundred dollar note

4

• What did the National Currency Act of 1813 do?
• Established standards for currency
• Taxed state bank notes
• Made the printing of state bank notes unprofitable

5

• What was Andrew Jacksons view of the second Bank
  of the U.S.?
• Thought to represent the advancement of the few
  at the expense of the many

6

• Why did the Civil War bring monetary issues to a
  crisis point?
• Inflation was rampant and that threatened the
  entire economic system

7

• What are functions of the Federal Reserve?
• Act as the Governments Bank
• Act as the Banks Bank
• Supervises Banks

8

• What was the purpose of the Emergency Banking Act
  of 1933?
• Separated commercial banking from investment
  banking to protect assets

9

• What is the FDIC? Up to how much does it
  guarantee?
• Federal Deposit Insurance Corporation
• 100,000

10

• What will happen if the government restricts the
  flow of cash into the economy too severely?
• Consumers cannot afford to borrow

11

• What is all media of exchange circulating in a
  country?
• Currency

12

• The National Banking Act of 1864 established the
  office of the _____ of the Currency to issue
  charters to national banks.
• Comptroller

13

• When a stock is bought on ________, it is
  purchased for a fraction of its price, then
  resold at a profit without the full purchase
  price of the stock ever having been paid.
• Margin

14

• A bank _________ occurs when many people try to
  withdraw their money from a bank at once.
• Run

15

• A collective rise in the supply of money,
  incomes, and prices is called _________.
• Inflation

16

• Any bank that is part of the Federal Reserve
  System is called a _________ bank.
• Member

17

• Examples of Paper Currency?
• Government
• Bank
• Deposit

18

• Why was the National Banking Act of 1864 enacted?
• To stabilize the banking system

19

• An increase in the money supply and _________
  often causes prices to go up as well.
• Incomes