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Econ 10
| Question | Answer |
|---|---|
| Money | Anything that serves as a medium of exchange, a unit of account, and a sore of value |
| medium of exchange | Anything that is used to determine value during the exchange of goods and services |
| Barter | Direct exchange of one set of goods or services for another |
| Unit of account | A means for comparing the values of goods and services |
| Store of value | Something that keeps its value if it is stored rather than spent |
| Currency | Coins and paper bills used a money |
| Representative money | Objects that have value because the holder can exchange them for something else of value such as paper receipts or IOU's |
| Commodity money | Objects that have value in and of themselves and that are also used as money such as salt, cattle, precious stones |
| Specie | Coined money usually gold or silver, used to back paper money |
| Fiat money | Objects that have value because a government has decreed that they are an acceptable means to pay debts |
| Bank | Institution for receiving, keeping and lending money |
| National bank | Bank chartered by the federal government |
| Bank run | Widespread panic in which many people try to redeem their paper money at the same time |
| Greenback | Paper currency issued during the Civil War |
| Gold standard | Monetary system in which paper money and coins had the value of certain amounts of gold |
| Central bank | Bank that can lend to other banks in time of need |
| Member bank | Bank that belongs to the Federal Reserve System |
| Forclosure | Seizure of property from borrowers who are unable to repay their loans |
| Money supply | All the money available in the United States economy |
| Liquidity | The ability to be used as, or directly converted into cash |
| Demand deposit | Money in a checking account that can be paid out "on demand", or at anytime |
| Money market mutual funds | Pools money from small savers to purchase short term government and corporate securities |
| Fractional reserve banking | Banking system that keeps only a fraction of its funds on hand and lends out the remainder |
| Default | Failing to pay back a loan |
| Mortgage | Specific type of loan that is used to buy real estate |
| Credit card | Card entitling its owner to buy goods and services based on the owner's promise to pay for those goods and services |
| Interest | Price paid for the use of borrowed money |
| Principal | Amount of money borrowed |
| Debit card | Card used to withdraw money from a bank account |
| Creditor | Person or institution to whom money is owed |
| six characteristics of money | Durability, portability, divisibility, uniformity, limited supply, acceptability |
| Durability | Must withstand physical wear and tear from being used over and over |
| Portability | Easy to carry, small and light weight |
| Uniformity | Same in terms of what it will buy |
| Divisibility | Easily divided into smaller denominations, so you don't have to use exact change |
| Limit of supply | Federal Reserve controls the money supply to keep our currency valuable |
| Acceptability | Everyone in the economy must be able to take the objects that serves as money and exchange it for goods and services |
| Problems with state-chartered banks | Bank runs and panic, wildcat banks, fraud, many different currencies |
| Federal Reserve Banks | 12 |
| Great Depression | began in 1929 and lasted more than a decade |
| Savings and Loan Crisis | Deregulation and high interest rates caused competition in the market that the S&L's were not prepared for |
| FDIC | Federal Deposit Insurance Corporation, insures moneys in a bank for up to $250,000 |
| M1 | Assets that have liquidity and represent money that can be accessed easily and immediately to pay for goods and services |
| M2 | Consists of all assets in M1 plus M2. M2 is not as easily converted into cash. Sometimes it is called near money |
| Functions of financial institutions | Store money, save money, loans, mortgages, credit cards |
| Bank profit | The largest source of income for banks comes from the interest on loans |
| Types of financial institutions | Commercial banks, savings and loan associations, savings Banks, credit unions, finance companies |
| Debit card | Card used to withdraw money from a bank account |
| Creditor | A person or institution to whom money is owed |
Created by:
sudokken
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