Ch 14 Flashcards

1
Q

Medium of Exchange

A

Is usable for buying and selling goods and services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Unit of Account

A

A standard unit in which prices can be stated and the value of goods and services can be compared; one of the three functions of money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Store of Value

A

Enables people to transfer purchasing power from the present to the future

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Liquidity

A

The ease with which it can be converted quickly into the most widely accepted and easily spent form of money, cash, with little or no loss of purchasing power

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

M1

A

Two Components: 1) Currency (coins and paper money) in the hands of the public 2) All checkable deposits (all deposits in commercial banks and ‘thrift’ or savings institutions on which checks of any size can be drawn)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Token Money

A

The face value of any piece of currency is unrelated to its intrinsic value - the value of the physical material (metal or paper and ink) out of which that piece of currency is constructed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Federal Reserve Notes

A

Paper money issued by the federal reserve system

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Checkable Deposits

A

Any deposit in a commercial bank or thrift institution against which a check may be written

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Commercial Banks

A

the primary depository institution. A firm that engages in the business of banking (accepts deposits, offers checking accounts, and makes loans)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Thrift Institutions

A

Savings and loan associations, accept the deposits of households and business and then use the funds to finance housing mortgages and to provide other loans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

M2

A

Contains 3 categories of near monies: 1)Savings deposits, including money market deposits accounts 2) Small-denominated (less than $100,000) time deposits, 3) Money Market Mutual Funds held by individuals

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Near-Monies

A

Highly liquid assets that do not function directly or fully as a medium of exchange buy can be readily converted into currency or checkable deposits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Savings Account

A

A deposit in a commercial bank or thrift institution on which interest payments are received; generally used for saving rather than daily transactions; a component of the M2 money supply

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Money Market Deposit Account (MMDA)

A

an interest-bearing account containing a variety of interest-bearing short-term securities. Minimum balance requirement and a limit on how often a person can withdraw funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Time Deposits

A

An interest-earning deposit in a commercial bank or thrift institution that the depositor can withdraw without penalty after the end of a specified

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Money Market Mutual Funds (MMMF)

A

Use the combined funds of individual shareholders to buy interest-bearing short-term credit instruments such as certificates of deposit and US Government securities

17
Q

Legal Tender

A

Government designates currency

18
Q

Federal Reserve System

A

The US central bank, consisting of the Board of Governors of the Federal Reserve and the 12 Federal Reserve Banks, which controls the lending activity of the nations banks and thrifts and thus the money supply; commonly referred to as the “Fed”

19
Q

Board of Governors

A

The seven-member group that supervises and controls the money and banking system of the US

20
Q

Federal Reserve Banks

A

Collectively serve as the nation’s “central bank”. Also serve as the bankers’ Banks

21
Q

Federal Open Market Committee (FOMC)

A

Aids the board of governors in conducting monetary policy

22
Q

Subprime Mortgage Loans

A

High-interest rate loans to home buyers with higher than average credit risk

23
Q

Mortgage-Backed Securities

A

Bonds backed by mortgage payments

24
Q

Moral Hazard

A

the tendency for financial investors and financial services firms take on greater risks because they assume they are at least, partially insured against losses

25
Q

Troubled Asset Relief Program (TARP)

A

allocated $700 billion to the US treasury to make emergency loads to critical financial and other US firms

26
Q

Financial Services Industry

A

commercial banks, thrifts, insurance companies, mutual funds companies, pensions funds, security firms,and investment banks

27
Q

Wall Street Reform and Consumer Protection Act

A

laws enacted mid-2010