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Terms- Unit 5
Money, Banking, and Financial Markets
| Question | Answer |
|---|---|
| money | can be anything that is widely accepted in exchange for goods and services |
| money | simplifies business transactions by serving as a medium of exchange, a store of value, and unit of account |
| barter | the exvhange of goods or services for other goods or services without the use of money. Limits choices |
| currency | paper money and coins |
| Demand deposits | money held in checking accounts at a bank |
| medium of exchange | something people acquire for the purpose of payment for goods and services |
| store of value | something that can be saved and will hold its value relatively well over time |
| unit of account | a standard measure used to set prices and make economic calculations |
| durable and portable | light enough to carry but sturdy |
| uniform and divisible | easily recognized as money |
| commodity money | money that has value apart from its use as money |
| representative money | has no value of its own but can be exchanged for something of value |
| fiat money | has value because the government has ordered that it be accepted in payment of debts |
| money supply | the amount of money available for the purchase of goods and services |
| M1 | measure of the money supply that includes only forms of money that are readily available to spend. cash, checking account deposits, traveler's checks |
| M2 | measure of the money supply that includes M1 along with forms of money that are less easily converted to cash: savings accounts |
| depository institution | financial institution that obtains money mainly through deposits from clients |
| commercial bank | accepts deposits from individuals and firms, and provides them with loans in addition to a wide variety of other services |
| savings bank | depository institution that specializes in loans for the purchase of homes and other real estate |
| thrift | established to encourage saving, can be a savings and loan association, a credit union or a savings bank |
| savings and loan associations(S&L) | (S&L) similar to savings banks, specialize in loans for the purchase of homes |
| credit union | not-for-profit, owned by its members, who are also its customers |
| equity financing | getting money by selling stock |
| debt financing | getting money by borrowing |
| nominal interest rate | the actual rate of interest that saver will receive and a borrower will pay |
| real interest rate | the nominal interest rate minus the expected rate of inflation |
| capital market | market in which money is lent one year or more |
| money market | market in which money is lent for less than a year |
| primary market | new assets are sold by their issuers |
| secondary markets | investors buy and sell financial assets that have already been purchased at least once |
| bear market | rapidly declining stock prices |
| bull market | steady growth in stock prices |
Created by:
WhitlockJ16
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