Chapter 10 Econ
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Money as a medium of exchange
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Buy and seller
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Money as a unit of account
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The bills (1,5's ;0's)
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Money as a store of value
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Price of the product
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Durability
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Last longer
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Portability
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Small enough to carry
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Divisiblity
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Easily break it down $20 to $10 to 1's
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Acceptability
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Agreed on a $1 is a $1
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National Banking Act 1863 ; 1864
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Positive:make all the money the same ; essential authority. Positive2: organized system
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Gold Standard-1870s
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Positive1:the value of money is the same (states) Positive2:limited supply
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federal reserve act 1913
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Positive1: 12 federal banks. Positive2: central authority over everything
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Federal Deposit Insurance Corporation (FDIC)-1933
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Your money will be protected. Your money is assured Positive:2-2008 you can't go above and beyond your loans of your money
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M1
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Represent money that people can gain access to easily and immediately to pay for goods and services
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M2
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Consists of all the assists in m1 plus several addition assets. Most people don't have access to neutral funds
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The five services that banks offer is
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1.checking account 2. saving account 3.debit cards 4.mortgage 5.credit cards
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Four types of financial institutions
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1.commerical Banks(3 types of banks, federal, states, local) 2.saving ;a loan association 3.saving banks 4.credit union(the people involve in the own credit union)
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Money supply
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All money available in the U.S.
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Liquidity
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Turn money into cash
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Demand deposit
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Money in A checking account that must be paid out at any time
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Default
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A fail to pay back a loan
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Mortgage
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A loan that buys real estate
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Barter
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A direct exchange of goods and services
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Currency
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Coins and paper bills used as money
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Specie
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Gold or silver coins used to back paper money
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Store value
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Holds its worth even if not used or spent
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Unit of account
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A way to compare the value of goods and services
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Why is portability and important characteristic of money?
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If we could not carry money with this it would be hard to use.
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Why is the divisibility and important characteristic of money
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It will be hard to use money if you always had have to use exact change.
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Which type of money has no value of its own but is valuable because it can be exchange for something else of value?
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Representative
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Why would commodity money be hard to use in most societies?
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It is often not portable durable or divisible
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Federal reserve notes
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Currency we use in the United States today
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Foreclosure
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When property is seized because a borrower cannot pay back a loan
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Greenbacks
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Paper money issued during the Civil War
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Securities
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Papers that show ownership or debt
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What is one reason the First Bank of the United States was established
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The money system was confusing because every state had its own currency
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What is one important disadvantage of the gold standard
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It limits the amount of money in circulation
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What is one baking reform made during the great depression
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The government created the Federal Deposit Insurance Corporation
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What was one cause of the savings and loan crisis in the 1980s?
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Not enough go to pay back loans
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Credit card
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Money paid for the use of borrow money
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Credit union
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I'm in controlled by its members
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Debit card
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Card that lets you withdraw money from your checking account
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Interest
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Lets you by now but pay later
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Principal
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Amount of money borrowed in a loan
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What is the important characteristic of the M1 money supply
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Flexibility
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What is fractional reserve banking
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Banks keep some money on hand and lend out the rest
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What is the largest source of income for banks
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Interest received on loans to customers
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Subprime
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referring to credit or loan arrangements for borrowers with a poor credit history, typically having unfavorable conditions such as high interest rates.
