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eco vocab 15-18
| Question | Answer |
|---|---|
| Money | Any medium that is universally accepted in an economy both by sellers of g/s as payment for those g/s and by creditors as payment for debts |
| Medium of exchange | any item that sellers will accept as payment |
| Barter | the direct exchange of g/s for other g/s without the use of money |
| Unit of accounting | a measure by which prices are expressed, the common denominator of the price system, a central property of money |
| store of value | the ability to hold value over time, a necessary property of money |
| Standard of deferred payment | a property of an item that makes it desirable for use as a means of setting debts maturing in the future, an essential property of money |
| Liquidity | The degree to which an asset can be acquired or disposed of without much danger of any intervening loss in nominal value and with small transaction costs |
| transaction deposits | Checkable and debitable account balances in commercial banks and other types of financial institutions, credit unions and savings banks. |
| Fiduciary monetary system | System in which money is issued by the government and its value is based on the publics faith that the currency represents command over g/s |
| Money supply | the amount of money in circulation |
| transaction approach | a method of measuring the money supply by looking at money as a medium of exchange |
| liquidity approach | a method of measuring the money supply by looking at money as a temporary store of value |
| M1 | the money supply measured as the total value of currency plus transactions deposits plus travelers checks not issued by banks |
| Depository Institutions | Financial institutions that accept deposits from savers and lend funds from those deposits out at interest |
| Thrift Institutions | Financial institutions that receive most of their funds from the savings of the public. Includes savings banks, savings and loan associations, and credit unions |
| Travelers checks | financial instruments obtained from a bank or a non banking org. and signed during purchase that can be used in payment upon a second signature by the purchaser |
| M2 | M1 plus savings deposits, small denomination time deposits, and balances in retail money market mutual funds |
| Financial intermediation | the process by which financial institions accept savings from businesses, households, and govts and lend the savings to others |
| Financial Intermediaries | institutions that transfer funds between ultimate lenders (savers) and ultimate borrowers |
| Asymmetric Information | Information possessed by one party in a financial transaction but not by the other party |
| Adverse Selection | the tendency for high risk projects and clients to be over represented among borrowers |
| Moral Hazard | The possiblity that a borrower might engage in riskier behavior after a loan has been obtained |
| Liabilities | Amounts owed, the legal claims against a business or household by nonowners |
| Assets | Amounts owned, all items to which a business or household holds legal claim |
| The Fed | the federal reserve system, the central bank of the US |
| FED FUNCTIONS | supplies currency, check clearing house, govts bank, supervise all banks, control $ supply, foreign market currency rate, lender of last resort |
| Reserve ratio | fraction of transactions deposits that banks hold as reserves |
| FOMC | fed open market operation |
| Money multiplier | a number that when multiplied by a change in reserves in the banking system yields the resulting change in money supply |
| potential money multiplier | the recipricol of the reserve ratio |
| Bank run | attempt by many of a banks depositers to convert transactions and time deposits into currency out of fear that the banks liabilities may exceed its assets |
| FDIC | fed deposit insurance corp |
| Money Balances | Synonyous with money, money stock, money holdings |
Created by:
bmurski