Unit 5 Economics Key Terms

barter system

a system of exchange where goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money.

commodity money

money whose value comes from a commodity of which it is made, such as gold or silver.

commodity-backed currency

money whose value has a direct relation with the value of a commodity (such as gold).

credit union

a member-owned, not-for-profit financial cooperative that provides savings, credit and other financial services to its members.

depository institution

a financial institution (such as a savings bank, commercial bank, savings and loan association, or credit union) that is legally allowed to accept monetary deposits from consumers.

double coincidence of wants

situation in which two people each want some good or service that the other person can provide.

economic growth

an increase in the amount of goods and services produced in a country over a period of time.

fiat money

currency that a government has declared to be legal tender, but which is not backed by a physical commodity such as gold.

financial intermediary

an institution (such as a bank) that facilitates the channeling of funds between lenders and borrowers indirectly.

medium of exchange

anything generally accepted as representing a standard of value and exchangeable for goods or services.

money

a medium of exchange in the form of coins and banknotes.

payment system

a system used to settle financial transactions through the transfer of monetary value between parties (example

purchasing power

the financial ability to buy products and services.

savings institution

also known as a savings and loan association (S&L), or thrift institution; this is a financial institution that specializes in accepting savings deposits and making mortgage and other loans.

standard of deferred payment

the accepted way, in a given market, to settle a debt.

transaction costs

a cost incurred in making an economic exchange.

store of value

any form of commodity, asset, or money that has value and can be stored and retrieved over time.

unit of account

a nominal monetary unit of measure used to place a value on goods, services, assets, liabilities, income, or expenses.