chapter 10 money and banking

Money

anything that serves as a medium of exchange, a unit of account, and a store of value

medium of exchange

anything that is used to determine value during the exchange of goods and services

barter

the direct exchange of one set of goods or services for another

unit of account

a means for comparing the values of goods and services

store of value

something that keeps its

value if it is stored rather

than spent

currency

coins and

paper bills used as

money

commodity money

objects that have value

in and of themselves and

that are also used as

money

representative money

objects that have value

because the holder

can exchange them for

something else of value

specie

coined money,

usually gold or silver,

used to back paper

money

fiat money

objects that have value because a government has decreed that they are an acceptable means to pay debt

bank

an institution for

receiving, keeping, and

lending money

national bank

a bank chartered by the federal

government

bank run

a widespread panic in which many people try to redeem their paper money at the same time

greenback

a paper currency issued during

the Civil War

gold standard

a monetary system in which paper money and coins had the value of certain amounts of gold

central bank

a bank

that can lend to other

banks in time of need

member bank

a bank

that belongs to the

Federal Reserve System

foreclosure

the

seizure of property from

borrowers who are

unable to repay their

loans

money supply

all the

money available in the

United States economy

liquidity

the ability to

be used as, or directly

converted into, cash

demand dep

money market mutual

fund

a fund that pools

money from small savers

to purchase short-term

government and corporate

securities

fractional reserve

banking

default

failing to pay

back a loan

mortgage

a specific

type of loan that is used

to buy real estate

credit card

card entitling its owner to

buy goods and services

based on the owner's

promise to pay for those

goods and services

interest

the price paid for the use of borrowed money

principal

the amount of

money borrowed

debit card

a card used to withdraw money from

a bank account

creditor

a person or

institution to whom

money is owed