Economics Chapter 10 Test Review – Flashcards
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Liquidity
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the ability to be used as , or directly converted, to cash
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M2
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asset or money tied up in investment
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Money supply
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all the money available in the United States economy
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Greenbacks
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paper money issued by the North during the Civil war
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Gold standard
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a monetary system in which paper money and coins are eqaul in value to a certain amount of gold
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Creditor
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person or institution to whom money is owned
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Currency
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coins and paper bills used as money
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Bank
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an institution for receiving, keeping, and lending 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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Time on back of $100 bill
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4:10
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Default
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failure to pay back a loan
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Federal Reserve system
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the nation's central banking system
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Principal
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the amount of money borrowed
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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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Interest
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the price paid for the use of borrowed money, or, money earned by deposited funds
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Mutual fund
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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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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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A system where you trade goods or services for other goods and services
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barter system
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The 2 parts that make up the US money supply
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M1- easily covert to cash M2- asset or money tied up in investment
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People used to use shells for $ what was the disadvantage of that
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...hey were not accepted by everyone and anybody could get them.
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A IOU note is an example of what kind of money
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representative
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What does the FDIC insure
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Deposits in banks
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What did the federalist believe about banking
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Strong central bank
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In what era did currency vary from state to state
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free banking
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What was the commodity money issued during the civil war called
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greenbacks
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What is purchased with mortgage loan
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a house
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Define liquid asset
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Items of value that can be easily turned into cash
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What are 3 advantages of using cash for money
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divisible, portable , and durable
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What is it called when customers withdraw more cash than the bank has
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bank run
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Government must control money supply for what kind of money to work?
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fiat
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What happens when you buy something with a credit card
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the bank pays for it
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What Is The Largest Source of Income for banks
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loan payments
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How do credit card companies make money
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by charging interest on purchases
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Define M1 and M2 money supplies and give example of each
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M1- easily covert to cash (cash) M2- asset or money tied up in investment (mutual fund)
