Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key


Play button


Play button




Click to flip

34 Cards in this Set

  • Front
  • Back
  • 3rd side (hint)
What is Money?
Anything that serves as a medium of exhange, a unit of account, and a store of value
ex. currency, coinage, wampums, livestock, etc.
What is a Medium of Exchange?
Anything that is used to determine value during the exchange of goods & services
people acquire goods & services through money or by bartering
What is Barter?
The direct exchange of one set of goods or services for another used in traditional unspecialized economies.
Used in traditional economies: Asia, Africa, Latin America & the U.S.A. informally
What is a Unit of Account?
A means for comparing the values of goods & services.
Price comparisons for determining purchases
What is a Store of Value?
Money keeps its value if you decide to hold on to-or store- it instead of spending it.
This is good practice unless the economy experiences rapid inflation during a particular year.
What is Currency?
The coins and paper bills used as money.
6 characteristics of money:
durability, portability, divisibility, uniformity, limited supply, & acceptability.
What is Commodity Money?
Objects that have value in and out of themselves and that are also used as money.
Examples are salt, cattle, and precious stones which have other uses & value to man besides a rate of exchange.
What is Representative Money?
Makes use of objects that have value because the holer can exchange them for something else of value.
Early types were paper reciepts for gold or silver. Transactions required weighing & testing coins for purity
What is Fiat Money?
Called "Legal Tender", this money has value because the government ha ordered that it is and acceptable means to pay debts.
Federal Reserve controls its supply therefore preserving its value & helping this system work.
What is a Bank?
An institution for receiving,
keeping, and lending money-near your home.
Todays ______ have developed over the nation's history to meet needs of a growing & changing populaton.
What is the National Bank?
A bank chartered/licensed by National Gov. which could issue a single currency for the entire nation, manage the federal government's funds, and monitor other banks throughout the country
Secretary of Treasury in 1789, proposed a bank chartered & licensed by the National Government.
What is a Bank Run?
Widespread panics in which great numbers of people tried to redeem their paper money at once causing banks to fail & public confidence to go down.
This happened when customers found it difficult to exchange their paper money for gold & silver.
What are Greenbacks?
The common name for currency produced in 1861 by the U.S. Treasury called "demand notes"
Coined the name because they were printed in green ink.
What is the Gold Standard?
A monetary system in which paper money and coins are equal to the value of a certain amount of gold.
Two Advantages were: 1. It set a definite value for the dollar so 1 oz/gold = $20 & 2. The gov.could issue currency only if it had gold in the treasury to back the notes.
What is the Federal Reserve System (Fed)?
The nation's first true "central bank" which could lend to other banks in time of need.
This national bank reorganized the federal banking system through member banks, Federal Reserve Board, Short-Term Loans & Federal Reserve notes.
What are Member Banks?
Banks belonging to the Federal Reserve System which stored some of their cash reserves at the district Fed.
Banks that were governed by Federal Reserve Board, allowed short term loans and issued Federal Reserve Notes.
What are Federal Reserve Notes?
The national currency of U.S.A. increased/decreased by the Federal Reserve for circulation to meet business needs.
Standardized U.S. currency started in 1913 by the Federal Reserve Act.
What was the Great Depression?
A severe economic decline that began in 1929 and lasted more than a decade.
Caused by unpaid high-risk business loans,unpaid farm loans due to drought & crop failure & the 1929 stock market crash due to widespread runs on banks due to depositors panic.
What is the Federal Deposit Insurance Corporation (FDIC)?
Congress passed this act in 1933 to insure customer deposits if a bank fails.
At 1st it insured deposits up to $2,500 but today has risen to $100,000 protection
What is the Money Supply?
All the money available to the United States economy.
Includes currency, traveler's checks, checking account deposits, & other components.
What is Liquidity?
The ability to be used as, or directly converted into, cash referred to by economists as M1.
The term for M1 money that people gain access to easily and immedicately to pay for goods & services
What are Demand Deposits?
Funds in checking accounts as they are paid "on demand"
or at any time.
Include "other checkable deposits" or checking accounts not paying interest.
What are Money Market Mutual Funds?
Part of M2 funds which pool money from small savers to purchase short-term government and corporate securities.
M2 Deposits that earn interest and cover checks written over a certain minimum account
( ex. $250.00)
What is Fractional Reserve Banking?
A banking system that keeps only a fraction of funds on hand and lends out the remainder.
Banks lending money to homeowners for home improvements, college tuitions, & start-up costs for businesses
What is a Default?
When a borrower fails to pay back a loan causing the lender ( bank ) to lose money.
Too many bad loans and banks will be out of business.
What is a Mortgage?
A specific type of loan used to buy real estate.
Families often pay a percentage of the cost of a house/real estate loan with repayment over a 15,25,or 30 yr. period with interest based on creditworthiness.
What is a Credit Card?
A card entitling its holder to buy goods and services based on the holder's promise to pay for these goods and services.
A card allowing you to purchase goods/services on credit. The issuer (bank) pays the charge purchases & you pay back the bank with interest based on lender rates & time taken to repay
What is Interest?
The price paid for the use of borrowed money.
This price of borrowing is simple or compound and set by the lender.
What is Principal?
The amount borrowed from a lender.
Simple interest is paid only toward this. Ex. If you deposit $100 in a savings account @ 5% interest, you will make $5 in a yr. ( if pd. annually)
What is a Debit Card?
A card used to withdraw money from an ATM/automated teller machine or to pay a store for a good/service.
Cost of electronic banking is cheaper with this card, 7cents vs. 35cents for processing a paper check
What is a Creditor?
A person or institution to whom money is owed.
Automated Clearing Houses (ACMs) located in Federal Reserve Banks are used by people to repay mortgage payments to their ___?_____.
What is a Central Bank?
A bank that can lend to other banks in times of need.
Term for the FED (Federal Reserve System) which lent to member banks and is headed by the Federal Reserve Board.
Any money that people can gain access to easily & immediately to pay for goods & services ( i.e., liquidity) including currency, checks, travelers' checks, et. al.
M1 money
All assets in M1 plus "near money" ex. deposits in savings accts.
M2 money