Econ: Chapter 11 and 10

barter economy

trade

monetary standard

keeps the characteristics of $

money

substance that serves as a medium of exchange has a measure of value and store of value

money has to have

• Medium of exchange

• store of value

• measure of value

medium of exchange

something accepted by all parties as a payment for good/services

store of value

property that allows purchasing power to be saved until needed

measure of value

common denominator that can be used to express worth in terms most can understand

characteristics of money

1. portable

2. divisible

3. durable

4. limited in supply

in 1961 the U.S. printed a universal paper currency; Why?

The Civil War

legal tender

must be accepted as a payment of debt

gold certificates

paper currency backed up by silver place on deposit with U.S. treasury

gold standard

money is equal to a certain amount of gold (1934)

inconvertible fiat $ standard

$ cant be converted to gold or silver by citizens

FDIC

insures money in banks- created by Glass-Stegal Act

federal reserve

1st central bank

govt. spends

more money than all private businesses combined

public sector

part of economy made up of local/state/fed. govt

private sector

part of economy made up of non-govt. businesses

per capital

per person

transfer payment

payment which the govt. doesn't receive any goods or services in return (grants in aid)

federal budget

annual plan outlining proposed revenue/expenditures

balanced budget

revenue=expenditures

fiscal year

oct. 1-sept. 30

medicaid

joint federal/state medical insurance program

deficit spending

spending in excess of revenue collected

federal debt

total amount borrowed to finance govt. spending

mandatory spending

needs congressional approval

discretionary spending

doesn't need congressional approval

entitlements

$ that must be paid to those that need the requirement of a specific govt. program