Chapter 10 Terms Flashcards
Anything that is commonly used and generally accepted in payment for goods and services; a medium of exchange.
Money
A form of money that a government declares must be accepted by creditors if it is tendered (offered) by a debtor.
Legal Tender
The exchange of one person’s goods or services for another’s goods or services.
Barter
Both parties involved in a trade of goods or services wanting what the other has to trade.
Double Coincidence of Wants
A commonly used or valued good that serves as a medium of exchange.
Commodity Money
A coin that contains an amount of gold or silver of equal worth to its face value
Full-Bodied Coin
A coin that contains a quantity of metal worth less than its face value.
Token Coin
Money that represents a commodity held in store.
Representative Money
Money that is not backed by anything of value but serves as money because of governmental decree.
Flat Money
A measure of the nation’s money supply that is available for immediate spending and includes currency, traveler’s checks, and checking accounts.
M-1
A measure of the nation’s money supply that includes all M-1 money plus all money that is available to spend after a short delay, such as savings accounts, small-time deposits, and other short-notice deposits.
M-2
A system in which a banker lends out more paper money than he can back.
Fractional Reserve Banking
The vast collection of financial institutions that receives deposits of excess funds from households and that lend to business firms; includes commercial banks, savings and loan associations, credit unions, insurance companies, finance companies, and stock brokerage firms.
Financial Market
A financial institution that accepts deposits and makes commercial and private loans.
Commercial Bank
An authorization for a bank to exist, issued either by the federal government or by the state government.
Charter
