CAS MA119: Applied Mathematics for Personal Finance Midterm Flashcards

money

a unit of account, means of exchange, and store of value

unit of account

used to measure a quantity

means of exchange

an accepted way of performing transactions between the buyers and sellers of goods and services

store of value

the quality of being able to hold value through time

fiat currency

currency that is a promise of repayment by the government, has no intrinsic value because it cannot be consumed, only have value because the government that created them asserts that they do and the citizenry agreed to use it as money

checks and debit cards

mechanisms that instruct a bank to transfer money from one account to another, but in of themselves are not money

credit cards

are not money, even though they are often accepted as means of exchange, because they do not provide a store of value or a unit of account; typically thought as negative money because amount owed must be paid out of other money holdings

emergency/reserve fund

store of wealth to be used only in case of a financial emergency such as a short-term job loss or medical emergency

income

payment one receives in exchange for producing goods or services, it is a flow, so measuring requires describing the quanity that flows in some period of time

consumption