Financial Sector Overview

These flashcards cover key terms and definitions related to the financial sector, as discussed in the lecture notes.

Barter System

A system where goods and services are traded directly without money.

Double Coincidence of Wants

The situation where each trader must have something the other wants in a barter system.

Commodity Money

Money that has intrinsic value, such as gold or silver.

Fiat Money

Money that has no intrinsic value but is established as money by government regulation.

Medium of Exchange

A function of money that enables buying and selling goods and services.

Unit of Account

A function of money that provides a way to measure and compare the value of goods and services.

Store of Value

A function of money that allows it to maintain value over time.

Liquidity

The ease with which an asset can be converted into cash or used as a medium of exchange.

M1 Money Supply

The category of money that includes cash and checkable deposits used as a medium of exchange.

M2 Money Supply

Includes M1 plus savings accounts and other near-moneys that aren't directly used in transactions.

Inflation

A general increase in prices and fall in the purchasing value of money.

Purchasing Power

The amount of goods and services that a unit of money can buy.

Gold Standard

A monetary system where a country's currency value is directly linked to gold.

E Pluribus Unum

Latin for 'Out of Many, One'; a motto on U.S. currency.