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Loe > chapter 10 > Flashcards

chapter 10 Flashcards

1
Q

anything that is used to determine value during the exchange of goods and services

A

medium of exchange

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2
Q

the direct exchange of one set of goods or services for another

A

barter

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3
Q

a means for comparing the values of goods and services

A

unit of account

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4
Q

something that keeps its value if it is stored rather than spent

A

store of value

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5
Q

coins and paper bills used as money

A

currency

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6
Q

objects that havew value iin and of themselves and that are also used as money

A

commodity money

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7
Q

objects that have value because the holder can exchange them for something else of value

A

representative money

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8
Q

coined money, usually gold or silver, used to back paper money

A

specie

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9
Q

objects that have value because a government has decreed that they are an acceptable means to pay debts

A

fiat money

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10
Q

an institution for receiving, keeping, and lending money

A

bank

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11
Q

a bank chartered by the federal government

A

national bank

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12
Q

a widespread panic in which many people try to redeem their paper money at the same time

A

bank run

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13
Q

a paper currency issued during the civil war

A

greenback

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14
Q

a monetary system in which paper money and coins had the value of certain amounts of gold

A

gold standard

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15
Q

a bank that can lend to other banks in time of need

A

central bank

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16
Q

a bank that belongs to the federal reserve system

A

member bank

17
Q

the seizure of property from borrowers who are unable to repay their loans

A

foreclosure

18
Q

all the money available in the United States economy

A

money supply

19
Q

the ability to be used as, or directly converted into, cash

A

liquidly

20
Q

money in a checking account that can be paid out “on demand” or at any time

A

demand deposit

21
Q

a funs that pools money from small savers to purchase short-term government and corporate securities

A

money market mutual fund

22
Q

a banksinf system that keeps only a fraction of its funds on hand and lends out the remainder

A

fractional reserve banking

23
Q

failing to pay back a loan

A

default

24
Q

a specific type of loan that is used to buy real estate

A

mortgage

25
Q

a card entitling its owner to buy goods and services based on the owners promise to pay for those goods and services

A

credit card

26
Q

the price paid for the use of borrowed money

A

interest

27
Q

the mount of borrowed money

A

principal

28
Q

a card used to withdraw money from a bank account

A

debit card

29
Q

a person or institution to whom money is owed

A

creditor

30
Q

list and define the three uses of money

A
  • medium of exchange - used to determine value
  • unit of account - comparing values
  • store of value - keeps it value
31
Q

list and briefly explain the six characteristics of money that economist use to judge how well an item serves as currency

A
  • durability - withstand physical wear
  • portability - take with you
  • divisibility - divide to be smaller
  • uniformity - two must be the same
  • limited supply - rare in supply
  • acceptability - be able to access
32
Q

list the three types of money and explain the source of value of each

A

commodity money - objects that have value
representative money - makes objects that have value because of holder
fiat money - government decreed money

33
Q

what are the two main categories of money supply and how do they differ from each other

A

M1 - consist of assets that have liquidity

M2 - same but cannot be used as cash directly

34
Q

What is the advantage of fractional reserve banking and what is the risk of fractional reserve banking?

A

the advantage to the bank is that it enables the bank to make more profit form the interest it charges on loans. the advantage to borrowers ant the economy on general is that it stimulates growth in the economy, thus creating wealth and new jobs. the disadvantage is that of diminished safety to the bank and economy; the smaller the fraction that the bank keeps on hand the greater the risk of the bank if borrowers default on their loans, and to the economy if defaults cause a general panic, a run on the banks.

35
Q

anything that serves as a medium of exchange, a unit of account, and a store of value

A

money

Loe (15 decks)

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