Economics Chapter 10 (10)
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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 set 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 that keeps its value if it is stored rather than spent
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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 and of themselves and that are also used 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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specie
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Coined money, usually gold or silver, used to back paper money
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fiat money
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Objects that have value because a government has decreed that they are an acceptable means to pay debts
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money supply
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All the money available in the United States economy
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liquidity
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The ability to be used as, or directly converted into, cash
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demand deposit
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Money in a checking account that can be paid out \"on demand\" (or at any time)
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money market mutual fund
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A fund that pools money from small savers to purchase short-term government and corporate securities
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fractional reserve banking
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A banking system that keeps only a fraction of its funds on hand and lends out the remainder
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default
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Failing to pay back a loan
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mortgage
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A specific type of loan that is used to buy real estate
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credit card
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A 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
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The price paid for the use of borrowed money
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principal
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The amount of borrowed money
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debit card
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A card used to withdraw money from a bank account
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creditor
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A person or institution to whom money is owed
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value
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Money can serve as a store of value because bartered items can lose their _____
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inflation
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Money is a good store of value except during ______
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durability
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Physical strength and damage prevention
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portability
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Ability to carry money everywhere
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divisibility
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Having different values of money ($1, 10c) so you don't have to rip things
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uniformity
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Having two units of money that must be the same
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limited supply
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Not having a bottomless pit of money (would cause dollar to be worthless)
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acceptability
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Ability to exchange for goods
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portability
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Commodity money lacks _____
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Barter
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______ is time-consuming, inconvenient and only satisfies specific needs
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value
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Unit of account means that money shows the ____ of one item relative to that of another
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government
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Representative money is back by gold or silver, while fiat money is valuable because the ______ says it is
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M1
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Money that people can gain access to easily and immidiately to pay for things
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M2
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Money that people can gain access to fairly easily along with immediatly accessed
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M2
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Assets also known as \"near money\"
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storing saving loans
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Financial institutions operate for ______ and _____ money, lending _____
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simple interest
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Interest paid only off of original principal
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compound interest
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Interest paid both on principal and accumulated interest
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Loan Associations
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Savings and ______ ______________ are financial institutions that work the same way banks do
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credit union
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Lending association by and for particular groups
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finance company
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Company that offers installment loans for expensive appliances
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Automated Clearing Houses
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_____ ______ _____ allow you to pay bills without writing checks
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demand deposits
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Another name for checking accounts
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reserve requirement
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Percentage amount the government tells banks to hold back
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money multiplier
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Factor of new loans and deposits that can be made from fracional reserve banking (1/RR)
