Ap Economics Chapter 13 Test Questions – Flashcards
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medium of exchange
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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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unit of account
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A standard unit in which prices can be states and the value of goods and services can be compared; one of the three functions of MONEY.
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store of value
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An ASSET set aside for future use; one of the three functions of MONEY.
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M1
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M1- The most narrowly defined MONEY SUPPLY, equal to CURRENCY in the hands of the public and the CHECKABLE DEPOSITS of commercial banks and thrift institutions. Includes token money, checking accounts,etc.
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M2
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A more broadly defined MONEY SUPPLY, equal to M1 PLUS NON CHECKABLE SAVINGS ACCOUNTS (including MONEY MARKET DEPOSIT ACCOUNTS), small TIME DEPOSITS (deposits of less than $100,000), and individual MONEY MARKET MUTUAL FUND balances. Includes near-monies, savings deposits, money market deposits, small time deposits, and everything in M1.
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M3
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A very broadly defined MONEY SUPPLY, equal to M2 plus large TIME DEPOSITS (deposits of $100,000 or more). Equal to M2+M1 AND everything else.
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token money
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Coins having a FACE VALUE greater than their INTRINSIC VALUE.
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Federal Reserve Note
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Paper money issued by the FEDERAL RESERVE BANKS.
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checkable deposit
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Any deposit in a COMMERCIAL BANK or THRIFT INSTITUTION against which a check may be written.
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commercial banks
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A firm that engages in the business of banking (accepts deposits, offers checking accounts, and makes loans).
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thrift institutions
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A SAVINGS and LOAN ASSOCIATION, MUTUAL SAVINGS BANK, or CREDIT UNION.
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near-monies
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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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savings account
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This is located at a bank or thrift and can simply be requested that the funds be transferred from a savings account to a checkable account.
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money market deposit account (MMDA)
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Interest-earning accounts at banks and THIRFT INSTITUTIONS, which pool the funds of depositors to buy various short-term securities.
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time deposits
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An interest-earning deposit in a COMMERCIAL BANK or THRIFT INSTITUTION that the depositor can withdraw without penalty after the end of a specified period.
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money market mutual funds (MMMF)
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Interest bearing accounts offered by investment companies, which poor depositors' funds for the purchase of short-term securities. Depositors may write checks in minimum amounts of more against their accounts.
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legal tender
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Anything that government says must be accepted in payment of a debt.
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transactions demand (for money)
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The amount of money people want to hold for use as a MEDIUM OF EXCHANGE (to make payments); varies directly with the NOMINAL GDP.
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asset demand (for money)
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The amount of MONEY people want to hold as a STORE OF VALUE; this amount varies inversely with the INTEREST RATE.
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total demand for money
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The sum of the TRANSACTION DEMAND FOR MONEY and the ASSET DEMAND FOR MONEY.
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money market
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The market in which the demand for and the supply of money determine the INTEREST RATE (or the level of interest rates) in the economy.
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Federal Reserve System
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Is the central banking system for USA, is in charge of banks and makes sure money is created or destroyed. They are the "monetary authorities" or "The Fed". The Board directs the activities of the 12 Federal Reserve Banks which in turn control the lending activity of the nation's banks and thrift institutions.
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Board of Governors
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The seven-member group that supervises and controls the money and banking system of the United States; the Board of Governors of the Federal Reserve System; the Federal Reserve Board.
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Federal Open Market Committee (FOMC)
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The 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 Reserve Banks
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The 12 banks chartered by the U.S. government to control the MONEY SUPPLY and perform other functions. CENTRAL BANK- a bank whose chief function is the control of the nation's money supply; in the US, the Federal Reserve System. BANKERS' BANK- A bank that accepts the deposits of and makes loans to DEPOSITORY INSTITUTIONS; in the United States, a Federal Reserve Bank. QUASI-PUBLIC BANK- A bank that is privately owned but governmentally (publicly) controlled; each of the U.S. FEDERAL RESERVE BANK.
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financial services industry
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Financial services are the economic services provided by the finance industry, which encompasses a broad range of organizations that manage money, including credit unions, banks, credit card companies, insurance companies, accountancy companies, consumer finance companies, stock brokerages, investment funds and some government sponsored enterprises.
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electronic transactions
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An electronic transaction is the sale or purchase of goods or services, whether between businesses, households, individuals, governments, and other public or private organisations, conducted over computer-mediated networks. The goods and services are ordered over those networks, but the payment and the ultimate delivery of the good or service may be conducted on or off-line.
