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Chapter 1.18
| Question | Answer |
|---|---|
| Barter system | A system of exchange in which goods or services are traded directly for other goods or services |
| Money | Anything a society uses to purchase products, services, or resources |
| Medium of exchange | Anything accepted as payment for products, services, and resources |
| Measure of value | A single standard or “yardstick” used to assign values to and compare the values of products, services, and resources |
| Store of value | A means of retaining and accumulating wealth |
| Demand deposit | An amount on deposit in a checking account |
| Time deposit | An amount on deposit in an interest-bearing savings account or certificate of deposit |
| Federal Reserve System | The central bank of the United States responsible for regulating the banking industry |
| Reserve requirement | the percentage of its deposits a bank must retain, either in its own vault or on deposit with its Federal Reserve District Bank |
| Discount rate | the interest rate the Federal Reserve System charges for loans to member banks |
| Open-market operations | The buying and selling of U.S. government securities by the Federal Reserve System for the purpose of controlling the supply of money |
| Commercial bank | A profit-making organization that accepts deposits, makes loans, and provides related services to its customers |
| National bank | A commercial bank chartered by the U.S. Comptroller of the Currency |
| State bank | A commercial bank chartered by the banking authorities in the state in which it operates |
| Savings and loan associations (S&L) | A financial institution that offers checking and savings accounts and CDs and that invests most of its assets in home mortgage loans and other consumer loans |
| Credit unions | A financial institution that accepts deposits from and lends money to only those people who are its members |
| Debit card | a card that electronically subtracts the amount of a purchase from the cardholder’s bank account at the moment the purchase is made |
| Electronic funds transfer (EFT) system | A means of performing financial transactions through a computer terminal or telephone hookup |
| Letter of credit | A legal document issued by a bank or other financial institution guaranteeing to pay a seller a stated amount for a specified period of time |
| Credit | Immediate purchasing power that is exchanged for a promise to repay borrowed money, with or without interest, at a later date |
| Commercial paper | a short-term promissory note issued by a large corporation |
| Federal funds rate | the interest rate at which a bank lends immediately available funds on deposit at the Fed to another bank overnight to meet the borrowing bank’s reserve requirements. |
| Check | a written order for a bank or other financial institution to to pay a stated dollar amount to the business or person indicated on the face of the check |
| NOW Account | an interest-paying checking account; NOW stands for Negotiable Order of Withdrawal. |
| Certificate of Deposit (CD) | a document stating that the bank will pay the depositor a guaranteed interest rate on money left on deposit for a specified period of time. |
| Line of Credit | a loan that is approved before the money is actually needed |
| Revolving credit agreement | a guaranteed line of credit |
| Collateral | real estate or property pledged as security for a loan |
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