Econ Chapters 11+12

Front 1

Money

Back 1

Any good that is widely accepted for purposes of exchange and in the repayment of debt.

Front 2

Barter

Back 2

exchanging goods and services for other goods and services without the use of money.

Front 3

Medium of exchange

Back 3

Anything that is generally acceptable in exchange for goods and services. A function of money.

Front 4

Unit of account

Back 4

A common measure in which relative values are expressed. A function of money.

Front 5

Store of Value

Back 5

The ability of an item to hold value over time. A function of money.

Front 6

Double coincidence of wants

Back 6

In a barter economy, a requirement that must be met before a trade can be made.

Front 7

M1

Back 7

Includes currency held outside banks, checkable deposits and traveler's checks.

Front 8

Currency

Back 8

Coins and paper money.

Front 9

Federal Reserve Notes

Back 9

Paper money issued by the fed.

Front 10

Checkable Deposits

Back 10

Deposits on which checks can be written.

Front 11

M2

Back 11

M1, savings deposits, small-denomination time deposits, money market mutual funds.

Front 12

Savings Deposit

Back 12

An interest-earning account at a commercial bank or thrift institution. Checks cannot be written from this account.

Front 13

Money Market Deposit Account

Back 13

An interest-earning account that has a minimum required balance and offer limited check-writing privileges.

Front 14

Time Deposit

Back 14

An interest-earning deposite with a specified maturity date. Subject to penalities for early withdrawal.

Front 15

Money Market Mutual Fund

Back 15

An interest-earning account at a mutual fund company. Minumum balance is required and has limited check-writing privileges.

Front 16

Fractional Reserve Banking

Back 16

A banking arrangement that allows banks to hold reserves equal to only a fraction of their deposit liabilities.

Front 17

Federal Reserve System

Back 17

-The Fed
-The central bank of the U.S.

Front 18

Reserves

Back 18

The sum of bank deposits at the Fed and vault cash.

Front 19

Required Reserve Ratio

Back 19

-r
-A percentage of each dollar deposited that must be held on reserve (at the Fed or in the bank's vault).

Front 20

Required Reserves

Back 20

The minimum amount of reserves a bank must hold against its checkable deposits as mandated by the Fed.

Front 21

Excess Reserves

Back 21

Any reserves held beyond the required amount. The difference between total reserves and required reserves.

Front 22

T-Account

Back 22

A simplified balance sheet that shows the changes in a bank's assets and liabilities.

Front 23

Simple deposit multiplier

Back 23

1/r

Front 24

Cash leakage

Back 24

Occurs when funds are held as currency instead of being deposited into a checking account.

Front 25

Monetary policy

Back 25

Changes in the money supploy, or in the rate of change of the money supply, to achiever particular macroeconomic goals.

Front 26

Open Market Purchase

Back 26

The buying of government securities by the Fed.

Front 27

Open Market Sale

Back 27

The selling of government securities by the Fed.

Front 28

Reserve Requirement

Back 28

The rule that specifies the amount of reserves a bank must hold to back up deposits.

Front 29

Federal Funds Market

Back 29

A market where banks lend reserves to one another, usually for short periods.

Front 30

Federal Funds Rate

Back 30

The interest rate in the federal funds market

Front 31

Discount Rate

Back 31

The interest rate the Fed charges depository institutions that borrow reserves from it.

Front 32

What happens as a result of an open market purchase/sale?

Back 32

Money supply rises/falls.

Front 33

What happens as a result of raising/lowering the required reserve ratio?

Back 33

Money supply rises/falls

Front 34

What happens as a result of lowering/raising the discount rate?

Back 34

Money supply rises/falls.