Economics Chapter 10 Terms

Money

Anything that is commonly used and generally accepted in payment for goods and services; a medium of exchange.

Legal Tender

A form of money that a government declares must be accepted by creditors if it is tendered (offered) by a debtor.

Barter

The exchange of one person's goods or services for another's goods or services.

Double Coincidence of Wants

Both parties involved in a trade of goods or services wanting what the other has to trade.

Commodity Money

A commonly used or valued good that serves as a medium of exchange.

Full-Bodied Coin

A coin that contains an amount of gold or silver of equal worth to its face value.

Token Coin

A coin that contains a quantity of metal worth less than its face value.

Representative Money

Money that represents a commodity held in store.

Fiat Money

Money that is not backed by anything of value but serves as money because of a governmental decree.

M-1

A measure of the nation's money supply that is available for immediate spending and includes currency, traveler's checks, and checking accounts.

M-2

A measure of the nation's money supply that includes all M-1 money plus all money that is available to spend after a short delay, such as savings accounts, small-time deposits, and other short notice deposits.

Fractional Reserve Banking

A system in which a banker lends out more paper money than he can back.

Financial Market

The vast collection of financial institutions that receive deposits of excess funds from households and that lend to business firms; includes commercial banks, savings and loan associations, credit unions, insurance companies, finance companies, and stockbrokage firms.

Commercial Bank

A financial institution that accepts deposits and makes commercial and private loans.

Charter

An authorization for a bank to exist, issued either by the federal government or by the state government.

Savings and Loan Associations (S&L's)

A financial institution designed to collect savings and use that capital to make loans.

Mutual Savings Banks

A financial institution that exists almost exclusively int eh northeastern United States and resembles a savings and loan except for some technicalities concerning its organization.

Credit Unions

A cooperative institution that pools the savings of its members and makes consumer loans available to them.