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23 Cards in this Set
- Front
- Back
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Barter
Page 26 |
A system of exchange in which individuals trade goods and services directly for other goods and services.
Its inefficiencies: 1. Buyers and sellers spend time looking for trading partners. 2. Source of inefficiencies it that under barter, each good has many prices. 3. Lack of standardization 4. Difficult to accumulate wealth. |
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Checks
Page 32 |
A promise to pay on demand money deposited with a bank or other financial institution.
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Commodity Money
Page 27 |
A good used as money that has value independent of its use as money.
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E-Money
Page 32 |
Digital cash people use to buy goods and services over the internet; short for electronic money.
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Fiat Money
Page 30 |
Money, such as paper currency, that has no value apart from its use as money.
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Hyperinflation
Page 39 |
A rate of inflation that exceeds 100% per year.
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Legal Tender
Page 30 |
The government designation that currency is accepted as payment of taxes and must be accepted by individuals and firms in payment of debts.
However, individuals firms do not have to accept money as legal tender. |
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M1
Page 34 |
A narrow definition of the money supply: the sum of currency in circulation, checking account deposits, and holdings of travelers checks.
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M2
Page 34 |
A broader definition of the money supply: all the assets that are included in M1, as well as tome deposits with a value of less than 100,000, savings accounts, money market deposit accounts, and non-institutional money market mutual fund shares.
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Medium of Exchange
Page 28 |
Something that is generally accepted as payment for goods and services; a function of money.
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Monetary Aggregates
Page 33 |
Measures of the quantity of money that are broader than currency; M1 and M2.
Basically, it is M1 and M2. |
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Money
Page 26 |
Anything that is generally accepted as payment for goods and services or in the settlement of debt.
Functions of money: 1. It acts as a medium of exchange. 2. It is a unit of account. 3. It is a store of value. 4. It offers a standard of deferred payment |
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Payment system
Page 31 |
The mechanism for conducting transactions in the economy.
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Quantity theory of Money
Page 38 |
A theory about the connection between money and prices that assumes that the velocity of money is constant.
It has to do with the equation. |
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Specialization
Page 28 |
A system in which individuals produce the goods and services for which they have relatively the best ability.
The makes it so the economy runs better because everyone is doing what they are best at. |
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Standard Deferred Payment
Page 29 |
The characteristic of money by which facilitates exchange over time.
Basically, you pay later. |
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Store of Value
Page 29 |
The accumulation off wealth by holding dollars or other assets that can be used to buy goods and services in the future; a function of money.
Means there will not be a lot of inflation so they money will store value over time. |
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Transaction Cost
Page 26 |
The cost in time or other resources that parties incur in the process of agreeing and carrying out an exchange of goods and services.
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Unit of Account
Page 28 |
A way of measuring value in an economy in terms on money; a function of money.
For example, you can purchase 20 eggs for 5 dollars. |
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Wealth
Page 29 |
The sum of the value of a person's assets minus the value of the person's liabilities.
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Equation of Exchange
Page 37 |
MV=PY
PY=Nominal GPD M=Quantity of money V=Velocity of money P=Price level Y=GDP |
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Velocity Equation
Page 37 |
V=PY/M
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Inflation Equation
Page 38 |
Inflation rate=change in M - change in Y
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