Ch 10 Econ

revolution

an overthrow of government

Federal Reserve System (Fed)

privately owned, publicly controlled, central bank of the United States

Federal Reserve Notes

paper currency issued by the Fed that eventually replaced all other types of federal currency

barter economy

moneyless economy that relies on trade or barter

commodity money

money that has an alternative use as an economic good; gunpowder, flour, corn, etc.

flat money

money by government decree; has no alternative value or use as a commodity

specie

money in the form of gold or silver coins

monetary unit

standard unit of currency in a country's money supply; American dollar, British pound, etc.

medium of exchange

money or other substance generally accepted as payment for goods and services; one of the three functions of money

measure of value

one of the three functions of money that allows it to serve as a common denominator to measure value

store of value

one of the three functions of money allowing people to preserve value for future use

demand deposit accounts (DDAs)

account whose funds can be removed from a bank or other financial institution by writing a check or using a debit card

M1

narrow definition of money supply conforming to money's role as medium of exchange; components include coins, currency, checks, other demand deposits, traveler's checks

M2

broad definition of money supply conforming to money's role as a medium exchange and a store of value; components include M1 plus savings deposits, time deposits, and money market funds

clauses

a stipulation, usually in a legal document

initially

originally; at the beginning

state bank

a bank that receives its charter from the state in which it operates

legal tender

currency that must be accepted for payment by decree of government

national bank

a commercial bank chartered by the National Banking System

national currency

currency backed by government bonds and issued by commercial banks in the National Banking System

Gold Certificates

paper currency backed by gold; issued in 1863 and popular until recalled in 1934

Silver Certificates

paper currency backed by, and redeemable for, silver from 1878 to 1968

gold standard

a system in which the basic unit of currency is equivalent to, and can be exchanged for, a specific amount of gold

central bank

a bank that can lend to other banks in times of need, or a "bankers' bank"

bank run

sudden rush by depositors to withdraw all deposited funds, generally in anticipation of bank failure or closure

bank holiday

brief period during which all banks or depository institutions are closed to prevent bank runs

Federal Deposit Insurance Corporation (FDIC)

the U.S. government institution that provides deposit insurance on the depositor's account

products

things that one sells

credit union

nonprofit service cooperative that accepts deposits, makes loans, and provides other financial services

corporation

form of business organization recognized by law as a separate legal entity with all the rights and responsibilities of an individual, including the right to buy and sell property, enter into legal contracts, and to sue and be sued

stock

certificates of ownership in a corporation; common or preferred stock

shareholder

person who owns a share or shares of stock in a corporation; same as stockholders

state-chartered bank

bank that receives its charter from the state in which it operates

certificates of deposit/CDs

receipt showing that an investor has made an interest-bearing loan to a financial institution

reserve requirement

formula used to compute the amount of a depository institution's required reserves