Banking and Financial Institutions Flashcard

Front

What is the primary function of a commercial bank?

Back

To lend money to businesses and individuals

Front

Which of the following is a type of financial institution that is owned and controlled by its members?
Options: Commercial Bank, Credit Union, Federal Reserve System, Bond Market

Back

Credit Union

Front

What does a certificate of deposit (CD) represent?

Back

A deposit made with a fixed term and interest rate

Front

What are bank reserves?

Back

The amount of money that banks hold in reserve accounts with the government.

Front

What is the dual mandate of The Federal Reserve?

Back

To control inflation and ensure maximum employment

Front

What is the role of the Federal Reserve System (the Fed)?

Back

To act as the central bank of the United States

Front

What is the Federal funds market?

Back

A market where commercial banks lend reserve balances to each other.

Front

The Federal funds rate is the interest rate charged by:

Back

The Federal Reserve on loans to commercial banks

Front

What is an interest rate?

Back

The rate it costs to borrowing money.

Front

Which term refers to the actions taken by the Federal Reserve to influence the economy?

Back

Monetary policy