Econ 165 CH 7 VOCAB

  1. Money
    Anything that is generally accepted as a medium of exchange
  2. Medium of Exchange
    Something that is generally accepted as payment for goods, service, and resources; the primary function of money
  3. Value of Money
    Measured by the goods, services, and resources that money can purchase
  4. Barter System
    System in which goods and services are exchanged for each other rather than for money
  5. Measure of Value
    A function of money; the value of every good, service, and resource can be expressed in terms of an economy's base unit of money
  6. Method for Storing Wealth and Delaying Payments
    A function of money; allows for saving, or storing wealth for future use, and permits credit, or delayed payments
  7. M1
    Narrowest definition of the US money supply; includes coins and paper money in circulation, some traveler's checks, most demand deposits, and other checkable deposits
  8. Token Money
    Money with a face value greater than the value of this commodity from which it is made
  9. Federal Reserve Notes
    Paper money issued by the Federal Reserve Banks; includes almost all paper money in circulation
  10. Currency
    Coins and paper money
  11. Demand Deposits
    Checking account balances kept primarily at commercial banks
  12. Other Checkable Deposits
    Interest-bearing accounts similar to demand deposits offered by financial institutions
  13. Velocity of Money
    Average number of times the money supply is turned over in a year in relationship to GDP
  14. M2
    M1 plus savings and small-denomination time deposit accounts, money market deposit accounts, and other financial instruments
  15. Liquidity
    Ease of converting an asset to its value in cash or spendable funds
  16. Commodity Monetary Standard
    An economy's money is backed by something of tangible value such as gold or silver
  17. Paper Monetary Standard
    An economy's money is not backed by anything of tangible value such as gold or silver
  18. Financial Depository Institution
    Institution that accepts and maintains deposits and makes loans; can create and destroy money
  19. Commercial Bank
    Institution that holds and maintains checking accounts (demand deposits) for its customers, makes commercial (business) and other loans, and performs other functions
  20. Dual Banking System
    Label given to the US banking system because both the federal and state governments have the right to charter banks
  21. National Bank
    Commerial bank incorporated under a federal rather than a state character
  22. State Bank
    Commercial bank incorparated under a state character
  23. Federal Deposit Insurance Corporation (FDIC)
    Government agency established in 1933 to insure deposits in commercial banks up to a specified amount
  24. Asset
    Something that an individual or business owns; can be used to cover liabilities
  25. Liability
    A claim on assets; an obligation or a debt of an individual or a business
  26. Net Worth
    Assets minus liabilities; the monetary value of a business
  27. Federal Reserve System
    Coordinates commercial banking operations, regulates some aspects of all depository institutions, and oversees the US money supply
  28. Board of Governors
    Seven-member board heading the Federal Reserve System; develops policies concerning money, banking, and other financial institutional practices
  29. Open Market Committee
    Oversees the buying and selling of government securities by the Federal Reserve System
  30. Federal Reserve Banks
    12 banks that deal with commercial banks and other financial institutions
  31. Reserver Account
    Deposit in the name of a financial institution held at a Federal Reserve Bank or other designated place
  32. Correspondent Banking
    Interbank relationship involving deposits and various services
  33. Depository Institutions Deregulation and Monetary Control Act (1980)
    Legislation that increased the similarity among many financial institutions and increased the control of the Federal Reserve System
  34. Resolution Trust Corporation (RTC)
    Federal agency created to reorganize troubled savings and loans or to deal with their affairs if they failed and closed
  35. Federal Savings and Loan Insurance Corporation (FSLIC)
    Federal agency established in 1934 to insure deposits in savings and loan institutions; the FDIC took over many of its functions when the FSLIC was dissolved in 1989
  36. Money Market
    An expression used to refer to corporate and government borrowing on a very short-term basis
  37. Mutual Fund
    Pool of money form depositors that is used to make investments
  38. Garn-St. Germain Act (1982)
    Strengthened the deregulatory trend begun by the Monetary Control Act of 1980
  39. Riegle-Neal Interstate Banking and Branching Efficiency Act (1994)
    Allows banking organizations from one state to open or acquire banks, and to open branches, in other states
  40. Gramm-Leach-Billey Act (Financial Services Modernization Act) (1999)
    Allows bank holding companies that meet vertain standards to become financial holding companies
  41. Interstate Banking
    The performance of services in more than one state by a single banking organization
  42. Unit Banking
    Operation of one bank with no branches
  43. Bank Holding Company
    Corporation formed for the purpose of owning, or holding, controlling shares of stock in a bank, or banks
  44. Financial Holding Company
    A holding company that can engage in banking, securities, insurance and other financial activities
  45. Branch Banking
    Operation of more than one facility by a bank to perform its functions
Card Set
Econ 165 CH 7 VOCAB
econ 165