Chapter 10 Terms Flashcards
anything that a society commonly uses and generally accepts in payment for goods and services
Money
If you offer anything as payment for a debt, all creditors must accept it
Legal tender
the exchange of one person’s goods or services for another’s
Barter
both parties involved in the trade wanting what the other has to offer
Double coincidence of wants
one in which some single commonly used good becomes the economy’s medium of exchange
Commodity money standard
Whenever a coin contains an amount of gold or silver equal to its face value
Full-bodied coin
A coin that contains a quantity of metal less than its face value
Token coin
money that represents a commodity that some entity holds in store
Representative money
does not have gold or something of substantive value backing it
Fiat money
attempts to measure the money Americans have available for immediate spending and reflects the role that money has as a medium of exchange
M-1
represents money that consumers could immediately spend (M-1) plus all money that is available to spend after a short delay
M-2
in which a banker lends out more paper money than he can back in gold
Fractional reserve banking
the collection of organizations that assist households in channeling their money to businesses and the government
Financial market
a financial institution that accepts deposits and makes commercial loans
Commercial banks
For a bank to open its doors, it first must receive this authorization to exist
Charter
