Econ topic 6

federal reserve bank

the system created as many as 12 regional Federal Reserve Banks throughout the country. All banks chartered by the national government were required to become members of the Fed. The Federal Reserve Banks are the central banks for their districts

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

Unit of account

a means for comparing the values of goods and services

Store of value

to keep value when held onto—or stored—it instead of spending

Currency

anything used as money; today we use coins and paper bills as money

Commodity money

consists of objects that have value in and of themselves and that are also used as money

Representative money

makes use of objects that have value solely because the holder can exchange them for something else of value

Specie

money in the form of gold or silver coins

Fiat money

Has value because a government has decreed that it is an acceptable means to pay debts, "legal tender"

Barter

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

bank

an institution for receiving, keeping, and lending money

national bank

a bank chartered, or licensed, by the national government

bank runs

widespread panics in which great numbers of people try to redeem their paper money at the same time

greenbacks

Printed in 1861 and so nicknamed because they were printed with green ink, these were the first paper currency issued by the U.S. Treasury since the Continental.

gold standard

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

central bank

bank that can lend to other banks in times of need

Member banks

bank that belongs to the Federal Reserve System

Federal reserve board

All of the federal reserve banks were supervised by the federal reserve board, which is appointed by the president of the US;

independent agency of the federal government established in 1913 to regulate the nation's banking and financial industry

Short term loans

Each of the regional Federal Reserve Banks allowed member banks to borrow money to meet short-term demands. This helped prevent bank failures that occurred when large numbers of depositors withdrew funds during a panic.

Federal reserve notes

the national currency we use today in the United States

Foreclosures

The seizure of property from borrowers who are unable to repay their loans

Monetary policy

the actions that the Federal Reserve System takes to influence the level of real GDP and the rate of inflation in the economy

Reserves

deposits that a bank keeps readily available as opposed to lending them out

Reserve requirements

The amount of reserves that banks are required to keep on hand

Check clearing

The process by which banks record whose account gives up money and whose account receives money as a result of a customer writing a check

Bank holding company

a company that owns more than one bank

Federal funds rate

the interest rate banks charge each other for loans

Discount rate

the interest rate that the Federal Reserve charges commercial banks for loans

Money supply

All of the money in the United States economy

Liquidity

the ability to be used as, or directly converted to, cash

Demand deposits

Funds in checking accounts

Money market mutual funds

funds that pool money from small savers to purchase short-term government and corporate securities

Fractional reserve banking

a banking system that keeps only a fraction of funds on hand and lends out the remainder

Default

Fail to pay back loans

Mortgage

Specific type of loan that is used to buy real estate

Credit cards

cards entitling their owners to buy goods and services based on the owner's promise to pay

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

person or institution to whom money is owed