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31 Cards in this Set
- Front
- Back
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functions of money |
1. medium of exchange 2. unit of account 3. store of value 4. liquidity |
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medium of exchange |
it is usable for buying and selling goods and services |
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unit of account |
a measure of the relative worth of the goods and services and resources we buy and sell |
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store of value |
enables the transfer of purchasing power from the present to the future |
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liquidity |
the ease in which it an be converted quickly, accepted and with little loss of purchasing power |
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perfectly liquid |
cash |
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highly liquid |
may take time to sell and obtain cash |
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components of money supply (M1) |
1. currency coins & paper money 2. all checkable deposits |
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the U.S. government supplies....... |
M1 |
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banks and thrifts provide........ |
checkable deposits |
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via banks, the treasury department and U.S. mint provide..... |
coins |
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curreny |
provided by the federal reserve notes and are printed by the treasury deparement |
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token money |
the face vale of any price of currency is unrelated to its intrinsic value |
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checkable deposits |
a large component of M1 makes it easy and safe to exchange large amounts of currency |
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commercial banks |
primary depository institutions |
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thrift institutions (thrifts) |
use the funds to finance housing mortgages |
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credit unions |
accept deposits from and lend to members who usually are group of people who work for the same organization of interest |
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M2 |
M1 + near monies highly liquid financial assets that do not function directly or fully as a medium of exchange but an easily be converted into currency or checkable deposits |
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savings account |
a bank account that earns interest |
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a money market account |
a bank account that earns interest |
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time deposists |
less than $100,00 become available at maturity without penalty of 6 months interest or moreq |
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monkey market mutual funds |
of less than $100,000 become available at maturity without penalty of 6 months interest or more |
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money supply |
is backed or guaranteed by the USG ability to keep the value of money relatively stable |
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legal tender |
confidence in the acceptability of paper money has the government backing and is accepted as Legal Tender for all public and private debts |
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relative scarcity |
the value of money depends on its supply and demand |
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purchasing power of the dollar |
will vary inversely with the price level |
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the central authority |
is the Board of Governors- the President of the US appoints the seven members of the Board with the confirmation of the US Senate for terms of 14 years |
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the 12 federal reserve banks |
blend private and public control of the nations central bank |
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the 12 district banks |
Boston, New York, Philadelphia, Richmond, Atlanta, Minneapolis, Chicago, Cleveland, St Louis, Dallas, Kansas City and San Francisco` |
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mortgage baked securities |
are securities which are securitized and sold to investors |
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securitization |
is the process of bundling groups of loans into distinct new securities |
