Chapter 3 Flashcards
Money
Anything that is generally accepted in payment for goods or services or in the repayment of debts
medium of exchange
Facilitates exchange, eliminates need for double coincidence of wants
-> must be easily standardized, be widely accepted, be divisible, be easy to carry, not deteriorate quickly
unit of account
units in which value is denominated throughout the economy, reduces transaction costs
store of value
repository of purchasing power over time, money is the most liquid of all assets but does not pay a return, so it loses value during inflation, money is particularly poor store of value during periods of hyperinflation
payment system
method of conducting transactions in the economy
commodity money
money made of precious metals, valuable easily standardized and divisible commodities, problem: hard to transport
fiat money
paper money decreed by governments as legal tender
cheques
an instruction to your bank to transfer money from your account to someone else’s account, lowers transaction costs but takes time to clear
open banking
a system that provides a user with a network of financial institutions’ data through the use of application programming interfaces
liquidity
the relative ease and speed with which an asset can be converted into a medium of exchange
monetary aggregates
the amount of money in circulation in the economy (measures of the money supply)
M2
personal deposits at chartered banks, non-personal demand, and notice deposits at chartered banks, fixed term deposits
M3
Non-personal term deposits at chartered banks, foreign currency deposits of residents at chartered banks
M2+
Deposits at trust and mortgage loan companies (TMLs), Deposits at credit unions and caisses popularies (CUCPS), life insurance company individual annuities, personal deposits at government-owned savings institutions, money market mutual funds
M2++
Canada Savings Bonds and other retail instruments, non-money market mutual funds
