Chapter 20: Money, Financial Institutions, and the Federal Reserve Flashcards
banker’s acceptance
A promise that the bank will pay some specified amount at a particular time.
barter
The direct trading of goods or services for other goods or services.
certificate of deposit (CD)
A time-deposit (savings) account that earns interest to be delivered at the end of the certificate’s maturity date.
commercial bank
A profit-seeking organization that receives deposits from individuals and corporations in the form of checking and savings accounts and then uses some of these funds to make loans.
credit unions
Nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members.
debit card
An electronic funds transfer tool that serves the same function as checks: it withdraws funds from a checking account.
demand deposit
The technical name for a checking account; the money in a demand deposit can be withdrawn anytime on demand from the depositor.
discount rate
The interest rate that the Fed charges for loans to member banks.
electronic funds transfer (EFT) system
A computerized system that electronically performs financial transactions such as making purchases, paying bills, and receiving paychecks.
Federal Deposit Insurance Corporation (FDIC)
An independent agency of the U.S. government that insures bank deposits.
International Monetary Fund (IMF)
Organization that assists the smooth flow of money among nations.
letter of credit
A promise by the bank to pay the seller a given amount if certain conditions are met.
M-1
Money that can be accessed quickly and easily (coins and paper money, checks, traveler’s checks, etc.).
M-2
Money included in M-1 plus money that may take a little more time to obtain (savings accounts, money market accounts, mutual funds, certificates of deposit, etc.).
M-3
M-2 plus big deposits like institutional money market funds.