Honors Econ Vocab Unit 5 Baumann
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money
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anything that serves as a medium of exchange, a unit of account, and a store of value
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medium of exchange
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anything that is used to determine value during the exchange of goods and services
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barter
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the direct exchange of one st of goods or services for another
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unit of account
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a means for comparing the values of goods and services
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store of value
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something the keeps its value if it is stored rather than used
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currency
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coins and paper bills used as money
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commodity money
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objects that have value in themselves as well as for use as money
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representative money
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objects that have value because the holder can exchange them for something else of value
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fiat money
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money that has value because the government has ordered that it is an acceptable means to pay debts
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gold standard
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monetary system in which paper money and coins are equal in value to a certain amount of gold
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default
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failure to pay back a loan
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interest
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the price paid for the use of borrowed money, or, money earned by deposited funds
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principal
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the amount of money borrowed
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creditor
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person or institution to whom money is owed
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over-draft protection
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A line of credit that banks offer to their customers to cover their overdrafts; kicks in when a customer writes a check for more than the amount in their account
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credit rating
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an evaluation made by credit bureaus of a borrower's overall credit history
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collateral
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property used to secure a loan
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annual percentage rate (APR)
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a finance charge expressed as an annual rate
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interest rate
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the proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding
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simple interest
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interest paid only on the original principal, not on the interest accrued
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compound interest
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interest paid on both the principal and on accrued interest
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fixed rate
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an interest rate on a liability, such as a loan or mortgage, that remains fixed either for the entire term of the loan or for part of this term
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variable rate
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an interest rate on a loan or security that fluctuates over time, because it is based on an underlying benchmark interest rate or index that changes periodically
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saving
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income not used for consumption
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investing
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the act of redirecting resources from being consumed today so that they may create benefits in the future; the use of assets to earn income or profit
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money market account
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a financial account that pays interest based on current interest rates in the money markets
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time deposit
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a deposit offering guaranteed interest for a fixed period of time
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certificate of deposit (CD)
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a certificate issued by a bank to a person depositing money for a specified length of time
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bonds
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formal contract to repay borrowed money with interest at fixed intervals
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stocks
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certificate of ownership in a corporation
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mutual funds
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fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets
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insurance
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a practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium
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premium
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money paid to an insurance company for a policy
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deductible
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amount of expanses that must be paid out of pocket before an insurer will cover any expenses
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copayment
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part of the cost of a medical visit or procedure that the patient must pay out of pocket
