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32 Cards in this Set
- Front
- Back
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barter
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exchange of one good or service for another
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money
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the set of assets in an economy that people regularly use to buy goods and services from other people
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medium of exchange
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an item that buyers give to sellers when they want to purchase goods and services
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unit of account
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the yardstick people use to post prices and record debts
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store of value
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an item that people can use to transfer purchasing power from the present to the future
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liquidity
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the ease with which an asset can be converted into the economy's medium of exchange
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commodity money
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money that takes the form of a commodity with intrinsic value
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wealth
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total of all stores of value (including money and nonmonetary assets
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intrinsic value
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an item that would have value even if it were not used as money
eg: gold, cigarettes, land? |
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gold standard
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when an economy uses gold as money
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fiat money
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money without intrinsic value that is used as money because of gov't decree
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fiat
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an order/ decree
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currency
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the paper bills and coins in the hands of the public
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money stock
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quantity of money circulating in the economy
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demand deposits
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balances in bank accounts that depositors can access on demand by writing a check
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Federal Reserve (FED)
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the central bank of the US
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Central Bank
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an institution designed to oversee the banking system and regulate the quantity of money in the economy
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money supply
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the quantity of money available in the economy
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monetary policy
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the setting of the money supply by policymakers in the central bank
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Federal Open Market Committee (FOMC)
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FED Committee in charge of monetary policies
-12 members (5 are pres) |
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Open Market Operations (OMOs)
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the purchase and sale of US gov't bonds
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Fractional-Reserve Banking
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a banking system in which banks hold only a fraction of deposits as reserves
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Reserve Ratio
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the fraction of deposits that banks hold as reserves
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100-percent reserve banking
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when the bank does not loan out any of the deposits
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reserves
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deposits that banks have received but have not loaned out
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t-account
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simplified accounting statement that shows changes in bank's assets and liability
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reserve requirement
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minimum amount of reserves that banks must hold
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excess reserves
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reserves above the legal minimum
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money multiplier
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the amount of money the banking system generates with each dollar of reserves
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open-market operations
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the purchase and sale of US gov't bonds by the Fed
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discount rate
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the interest rate on the loans that the Fed makes to banks
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bank run
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when depositors suspect that a bank may go bankrupt and "run" to the bank to withdraw their deposits
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