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26 Cards in this Set
- Front
- Back
Barter |
Trading one good or service for another directly, without using money. |
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Double Coincidence of Wants |
A situation in which both of two people each wants some food or service that the other person can provide. |
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Medium of Exchange |
Whatever is widely accepted as a method of payment. |
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Unit of Account |
The common way in which market values are measured in an economy. |
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Store of Value |
Something that serves as a way of preserving economic value that can be spent or consumed in the future. |
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Money |
Whatever serves society in three functions: Medium of exchange, unit of account, and store of value. |
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Currency |
Coins and paper money. |
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Demand deposits |
Deposits in banks that are available by making a cash withdrawal or writing a check. |
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M1 |
A narrow definition of the money supply that includes currency, traveler's checks, and checking accounts in banks. |
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M2 |
A definition of the money supply that includes everything in M1, but also adds saving deposits, money market funds, and certificates of deposit. |
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Saving Deposits |
Bank accounts where you can't withdraw money by writing a check, but can withdraw the money at a bank–or can transfer it easily to a checking account. |
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Money Market Funds |
Where the deposits of many investors are pooled together and invested in a safe way like short-term government bonds. |
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Certificate of Deposit (CD) |
A mechanism for a saver to deposit funds at a bank and promise to leave the, at the bank for a time, in exchange for a higher rate of interest. |
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Time Deposits |
Accounts that the depositor has committed to leaving in the bank for a certain period of time, in exchange for a higher rate of interest; also called certificates of deposit. |
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Financial Intermediary |
An institution that operates between a saver with financial assets to invest and an entity who will receive those assets and pay a rate of return. |
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Assets |
Items of value owned by a firm or an individual. |
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Liabilities |
Any amounts or debts owed by a firm or an individual. |
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Balance Sheet |
An accounting tool that lists assets and liabilities. |
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T-account |
A balance sheet with two-column format, with the T-shape formed by the vertical line down the middle and the horizontal line under the column headings for "Assets" and "Liabilities." |
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Bond |
A financial contract through which a borrower like a corporation, a city or state, or the federal government agrees to repay the amount that was borrowed and also a rate of interest over a period of time in the future. |
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Reserves |
Funds that a bank keeps on hand and that are not loaned out or invested in bonds. |
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Net Worth |
Total assets minus total liabilities. |
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Asset-Liability |
A bank's liabilities can be withdrawn in the short term while its assets are repaid in the long term. |
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Diversify |
Making loans or investments with a variety of firms, to reduce the risk of being adversely affected by events at one or a few firms. |
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Reserve Ratio |
The proportion of deposits that the bank holds in the form of reserves. |
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Money Multiplier |
Total money in the economy divided by the original quantity of money, or change in the total money in the economy divided by a change in the original quantity of money. |