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Economics > Chapter 9 > Flashcards

Chapter 9 Flashcards

1
Q

anything that is accepted as means of payment

A

money

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2
Q

most economists agree that money has three principle purposes (functions)

A
  1. medium of exchange
  2. provide measure of value
  3. provide a store of value
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3
Q

the direct exchange of one good for another good without a standard form of money passing from hand to hand

A

barter

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4
Q

enables us to measure the value or cost of a particular good against the values of other goods

A

money

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5
Q

six characteristics that should be found in money

A
  1. portability (easily carried about)
  2. durability (slow to wear out)
  3. homogeneity (standard, recognizable appearance)
  4. divisibility (available for use in both small and large units)
  5. constancy (stability in value)
  6. intrinsic valuableness (worth something in its own right, aside from being recognized as money)
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6
Q

T/F: many forms of money that have been used throughout history of the world have possessed all six characteristics of money

A

False

few forms of money

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7
Q

advantage of bartering

A

buyers need not have a money system

need not use cash which they wish to preserve or other purposes

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8
Q

coined, metallic money

A

specie

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9
Q

when people cannot trust the value of a form of money, they will save for themselves forms of money that seem more stable and valuable and will spend forms of money that seem less valuable

A

Grasham’s Law

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10
Q

the asserted value of something

A

face value

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11
Q

when the level of prices in the market rises because too much money is in circulation

A

inflation

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12
Q

if prices decrease because money seems more valuable and stable

A

deflation

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13
Q

term for when government deliberately lowers quality and value of coins

A

debased

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14
Q

any form of money that has been declared a valid means of payment

A

legal tinder

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15
Q

gold, silver, platinum usually found in the form of bars, ingots, or plats

A

bullion

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16
Q

a system which allows banks to hold less than 100 percent of deposits in reserve

A

fractional reserve banking

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17
Q

legal tender that is backed by nothing but a government’s money

A

fiat money

18
Q

the three categories that economists break up our nation’s money supply

A

M1
M2
M3

19
Q

the category most often referred to

most narrowly defined

A

M1

20
Q

checks________ money

A

ARE NOT

21
Q

assets that can easily be converted into M1 because they are highly liquid

A

near-monies

22
Q

the two categories of money that are often called near-monies

A

M2
M3

23
Q

category that consists of M1 plus noncheckable savings deposits, money market mutual funds an similar deposits and time deposits less than $100,000

A

M2

24
Q

time deposits worth over $100,000 are included in the category

A

M3

25
Q

established during President Washington’s administration

is the source of part of the American money supply

A

United States Department of the Treasury

26
Q

the majority of America’s money supply is under the control of a central banking network called the

A

Federal Reserve System

27
Q

an independent agency that does not answer directly to the citizens of the United States

A

Federal Agency

28
Q

three main components that make up the core of the Federal Reserve System

A

Board of Governors
Federal Open Market Committee
Federal Reserve Banks

29
Q

members of the Federal Reserve System’s __________________ are appointed by the President and confirmed by the US Senate

A

Board of Governors

30
Q

the Board of Governors’ duty it to

A

operate America’s banking system

31
Q

component of the Federal Reserve System that makes decision regarding the buying and selling of government securities (Treasury notes, bills, and bonds)

A

Federal Open Market Committee

32
Q

component of the Federal Reserve System that influences the policies of the private commercial banks with which you are familiar

A

Federal Reserve Banks

33
Q

the chief aim of the Federal Reserve System is to

A
  1. form America’s monetary policy
  2. control the money supply
34
Q

three main tools that enable the Federal Reserve System to increase or decrease the amount of money in circulation

A

open market operations
reserve ratios
discount rates

35
Q

a period, usually six months or longer, during which the economy declines

A

recession

36
Q

implies that more funds are in circulation through the ready approval on loan applications

A

easy money

37
Q

a conservative monetarist

A

Milton Friedman

38
Q

the theory that the variation in the money supply is the main source of economic fluctuations

A

monetarism

39
Q

Friedman became associated with the theory of

A

monetarism

40
Q

the root of all evil

A

love of money

41
Q

______________ in itself is neither good nor evil

A

money

42
Q
A

Economics (13 decks)

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