AP Macroeconomics: Chapter 13 – Flashcards
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any item sellers generally accept and buyers generally use to pay for a good or service; money; a convenient means of exchanging goods and services without engaging in barter
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Medium of Exchange
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standard unit in which prices can be stated and the value of goods and services can be compared; one of the three functions of money
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Unit of Account
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asset set aside for future use; one of the three functions of money
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Store of Value
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most narrowly defined money supply, equal to currency in the hands of the public and the checkable deposits of commercial banks and thrift institutions
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M1
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more broadly defined money supply, equal to M1 + noncheckable savings accounts (including money market deposit accounts), small time deposits (deposits of less than $100K), and individual money market mutual fund balances
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M2
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very broadly defined money supply, equal to M2 + large time deposits (deposits of more than $100K)
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M3
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coins having a face value greater than their intrinsic value
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Token Money
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paper money issued by the Federal Reserve Banks
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Federal Reserve Notes
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any deposit in a commercial bank or thrift institution against which a check may be written
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Checkable Deposits
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firm that engages in the business of banking (accepts deposits, offers checking accounts, and makes loans)
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Commercial Banks
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savings and loan associations, mutual savings banks, or credit unions
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Thrift Institutions
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financial assets, the most important of which are noncheckable savings accounts, time deposits, and U.S. short-term securities and savings bonds, which are not a medium of exchange but can be readily converted into money
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Near-Monies
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a savings deposit in a commercial bank or thrift institution
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Savings Account
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interest-bearing account at a bank or thrift institution, which pools the funds of depositors to buy various short-term securities
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Money Market Deposit Account (MMDA)
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interest-earning deposit in a commercial bank or thrift institution that the depositor can withdraw without penalty after the end of specified period
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Time Deposits
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interest-bearing account offered by an investment company, which pools depositors' funds for the purchase of short-term securities; depositors may write checks in minimum amounts or more against their accounts
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Money Market Mutual Fund (MMMF)
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legal designation of a nation's official currency (bills/coins); payment of debts must be accepted in this monetary unit, but creditors can specify the form of payment, i.e. "cash/credit card/check only"
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Legal Tender
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amount of money people want to hold as a medium of exchange (to make payments); varies directly with the nominal GDP
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Transactions Demand
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amount of money people want to hold as a store of value; varies inversely with the interest rate
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Asset Demand
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sum of the transactions demand and asset demand for money
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Total Demand for Money
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market in which the demand for and the supply of money determine the interest rate (or level of interest rates) in the economy
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Money Market
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U.S. federal banking system that is under the control of a central Board of Governors with a central bank in each of 12 districts; has wide powers in controlling credit and the flow of money
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Federal Reserve System
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seven-member group that supervises and controls the money and banking system of the U.S.A.; the Federal Reserve Board
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Board of Governors
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12-member group that determines the purchase and sale policies of the Federal Reserve Banks in the market for U.S. government securities
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Federal Open Market Committee (FOMC)
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12 banks chartered by the U.S. government to control the money supply and perform other functions
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Federal Reserve Banks
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the business activity of the financial institutions that offer money management services such as banking, investment, brokerage, and insurance
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Financial Services Industry
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using the Internet for purchases, payments, and transfers of money
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Electronic Transaction
