Module 4 Money & Banking- Vocab

Question 1

Bank Reserves

Answer 1

Money banks keeps on hand that is not loaned out or invested in bonds.

Question 2

Commodity Money

Answer 2

Money with an intrinsic value apart from its value as money.

Question 3

Deposit insurance

Answer 3

An insurance system that guarantees depositor deposits even if the bank goes bankrupt.

Question 4

Double coincidence of wants

Answer 4

Situation in which two people each want some good or service that the other person can
provide.

Question 5

Fiat money

Answer 5

Money with no intrinsic value but declared by a government to be the legal tender of a country.

Question 6

Financial intermediary

Answer 6

An institution that operates between a saver who deposits money in a bank and a borrower who receives a loan from that bank.

Question 7

Interest rate

Answer 7

The price of money in a money market.

Question 8

M1 money supply

Answer 8

Money that is very liquid such as cash, checkable (demand) deposits, and traveler’s checks.

Question 9

M2 money supply

Answer 9

Money that is less liquid in nature and includes M1 plus savings and time deposits, certificates of deposits, and money market funds.

Question 10

M3 money supply

Answer 10

Aa measure of the money supply that includes M2 as well as large time deposits, institutional money market funds, short-term repurchase agreements, and larger liquid assets.

Question 11

Money

Answer 11

Any item in an economy that serves as a medium of exchange, a store of value, and a unit of account.

Question 12

T-account

Answer 12

Accounting ledger of financial institutions displaying assets and liabilities.