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