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Econ - Topic 6 Vocab
Econ - Topic 6 Vocabulary
| Term | Definition |
|---|---|
| money | anything that serves as a medium of exchange, a unit of account, and a store of value |
| medium of exchange | anything that is used to determine value during the exchange of goods and services |
| unit of account | a means for comparing the values of goods and services |
| store of value | to keep value when held onto—or stored—it instead of spending |
| currency | anything used as money; today we use coins and paper bills as money |
| commodity money | consists of objects that have value in and of themselves and that are also used as money |
| representative money | makes use of objects that have value solely because the holder can exchange them for something else of value |
| fiat money | has value because a government has decreed that it is an acceptable means to pay debts |
| bank | an institution for receiving, keeping, and lending money |
| central bank | a bank that can lend to other banks in times of need |
| foreclosure | the seizure of property from borrowers who are unable to repay their loans |
| monetary policy | the actions that the Federal Reserve System takes to influence the level of real GDP and the rate of inflation in the economy |
| check clearing | the process by which banks record whose account gives up money and whose account receives money as a result of a customer writing a check |
| federal funds rate | the interest rate that banks can charge each other for loans |
| money supply | all the money available in the United States economy |
| liquidity | the ability to be used as, or directly converted into, cash |
| money market mutual fund | funds that pool money from small savers to purchase short-term government and corporate securities |
| interest | the price paid for the use of borrowed money |
| mortgage | a specific type of loan that is used to buy real estate |
| principal | the amount of money borrowed |
| credit card | a card entitling its owner to buy goods and services based on the owner’s promise to pay for those goods and services |
| debit card | a card used to withdraw money from a bank account |
| investment | the act of redirecting resources from being consumed today so that they may create benefits in the future; the use of assets to earn income or profit |
| financial system | the network of structures and mechanisms that allows the transfer of money between savers and borrowers |
| financial intermediary | an institution that helps channel funds from savers to borrowers |
| mutual fund | an organization that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets |
| hedge fund | a private investment organization that employes risky strategies that often make huge profits for investors |
| diversification | the strategy of spreading out investments to reduce risk |
| return | the money an investor receives above and beyond the sum of money initially invested |
| maturity | the time at which payment to a bondholder is due |
| par value | a bond’s stated value, to be paid to the bondholder at maturity |
| savings bond | a low-denomination bond issued by the United States government |
| municipal bond | a bond issued by a state or local government or a municipality to finance a public project |
| corporate bond | a bond issued by a corporation to help raise money for expansion |
| capital market | a market in which money is lent for periods longer than a year |
| money market | a market in which money is lent for periods of one year or less |
| capital gain | the difference between the selling price and purchase price that results in a financial gain for the seller |
| capital loss | the difference between the selling price and purchase price that results in a financial loss for the seller |
| share | a portion of stock |
| stock exchange | a market for buying and selling stock |
| bull market | a steady rise in stock prices in general over a period of time |
| bear market | a steady drop or stagnation in stock prices in general over a period of time |
| speculation | the practice of making high-risk investments with borrowed money in hopes of getting a big return |
Created by:
brittlloyd
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