economics unit 4 test study guide – Flashcards

commodity, representative, and fiat

The situation that exists when A has what B wants, and B has what A wants. These are often difficult to find; it reduces efficiency and increases transaction costs. Money is the best solution.

The direct exchange of one good for another, without the use of money

Money that can be accessed quickly and easily (coins and paper money, checks, traveler's checks, etc.).

money included in M-1 plus money that may take a little more time to obtain (savings accounts, money market accounts, mutual funds, certificates of deposit, etc.)

a banking system that keeps only a fraction of its funds on hand and lends out the remainder

(WW) 1913 , independent agency in the federal executive branch. Established under the Federal Reserve Act of 1913, the Federal Reserve System ("Fed") is the central bank of the United States. One of the most powerful agencies in the government, it makes and administers policy for national credit and monetary policies. The Fed supervises and regulates bank functions across the country, thus maintaining a sound and stable banking industry, able to deal with a wide range of domestic and international financial demands

A percentage of commercial banks' checking and savings accounts that must be physically kept in the bank.

the expansion of the money supply as a result of commercial banks' lending their depositors' money to others

Fed policies that contract the money supply and thus raise interest rates in an effort to restrain the economy

monetary policy that makes credit inexpensive and abundant, possibly leading to inflation

Price paid for the use of someone else's money.