Econ unit 5

Barter Economy

An economy based on the direct trade of goods and services.

Commodity Money

Money that has value because the item used as money has an intrinsic value.

Fiat Money

Money that has value simply because some government, institution or business says that it does.

Medium of Exchange

An item that is acceptable as payment in the trade of a good or service.

Measure of Value

An item that is used to compare the monetary worth of different goods and services. Also called a Standard of Value or Unit of Account.

Store of Value

An item that retains its monetary worth over time.

Demand Deposit Accounts

Bank accounts that allow the owner easy access to the held money.

Gold Standard

A representative currency whose value is back by gold held by the country.

FDIC

The agency responsible for insuring the deposits within American banks.

Savings

Bank accounts that give the customer interest on the money deposited.

Credit Union

An institution that offers banking services but is owned by those that have deposited money within it.

Diversification

Putting money in a variety of investments to decrease risk.

Risk

The idea that investments have no guarantee, and that the investor may lose money.

Bond

An investment with a government or business that has a guaranteed payment over a set amount of time.

Municipal Bonds

A bond sold by a city or county government.

Savings Bonds

A bond issued by a bank to its customers.

IRA

A savings plan that gives the owner the ability to avoid, reduce, or delay taxes on the money held in it.

Mutual Fund

An investment portfolio that gives the owner a proportional share of a larger investment in a variety of stocks, bonds, and other investments.

401k

A plan put in place by a business to help its employees save and plan for retirement.

Interest

The amount you are going to have to pay for taking out a loan.

Interest Rate

The percentage of the amount borrowed that you will be charged for taking out a loan.

Installment Loan

A traditional loan in which the borrower pays back the amount owed over a preset period of time. Also called a bank loan.

Revolving Loan

A loan in which the borrower is allowed to continually borrow and payback money up to a preset limit. Also called a credit card loan.

Title Loan

A loan in which the borrower uses something of value that they own as collateral.

Payday Loan

A short term loan which is typically intended to be paid off on your next payday.

Collateral

An item of value that is pledged to loan as security against default.

Creditor

A person or business who is owed money.

Default

Failure to pay back a loan.

Fixed Rate Mortgage

A home loan in which the interest rate does not change.

Adjustable-Rate Mortgage

A home loan in which the interest can will change over time.

Premium

The monthly payment a customer makes to maintain their insurance.

Deductible

The amount of money a customer must pay before the insurance company will pay.