money Flashcards
three uses of money
medium of exchange
unit of account
store of value
must withstand the physical wear and tear
durability
must be easily transferable
portability
must be easily divided into smaller denominations
divisibility
must be uniform
uniformity
more available»> less valuable
limited supply
must be able to exchange the objects
acceptability
something that keeps its value if held
store of value
objects that have value because the holder can exchange them for something else of value
representative money
money that has value because the government says it’s acceptable for paying debts
fiat money
anything that is used to determine value during the exchange of goods and services
medium of exchange
exchange of one set of goods and services relative to eachother
unit of account
anything used as a medium of exchange, a unit of account, and a store of value
money
objects that have value in themselves as well as for their use as money
commodity money
what were the first two attempts to centralize US banking and when were they in operation
the first bank of the US (1791-1811)
the second bank of the US (1816-1832)
what problems were associated with the free banking era (1837-1863), dominated by state-chartered banks
bank runs and panics, wildcat banks, fraud, and many different currencies
how did the national banking acts of 1863 and 1864 promote stability
gave the federal gov power to charter banks
stabilized the currency and gave the public confidence by setting a value of gold per dollar by requiring gov to issue only as much currency as the amount of gold in the treasury
gold standard
how did the federal reserve system, established in 1913, begin to manage the money supply
regional federal reserve banks stored some of their member banks cash reserves
what guarantee was made available to bank customers in 1933
insured individual deposits of up to $2500 if a bank fails
the gov could only issue currency if it had gold in the treasury to back it
gold standard
paper currency printed with green ink that was issued by the US treasury during the civil war but not backed by gold or silver
greenback
receives , keeps , and lends money
bank
the nations central banking system
federal reserve system
5 services that banks offer
storing money saving money loans credit cards simple and compound interest
describe 4 types of financial institutions
commercial banks
savings and loan associations
savings banks
credit unions
all the money available in the US economy
money supply
the ability to be used as, or directly converted to cash
liquidity
the money in checking accounts
demand deposit
a fund that pools money from small savers to purchase short term gov and corporate securities
money market mutual fund
a banking system that keeps only a fraction of funds on hand and lends out the remainder
fractional reserve banking
failure to pay back a loan
default
a specific type of loan that is used to buy real estate
mortgage
a card entitling it’s holder to buy goods and services
credit card
the price paid for the use of borrowed money
interest
a card used to withdraw money
debit card
person or institution to whom money owned
creditor
what you fill out to put check into account
deposit slip
what three things should you be aware of when balancing your checkbook
outstanding checks
outstanding deposit
account fees
spending and savings plan based on estimating your income and expenses
budgeting
money before taxes are taken out
gross income
money after taxes are taken out
net income
not going away
ex. mortgage
fixed expense
changes
ex. water
flexible expense
leftover money incase of emergency
emergency fund
things gov did to make counterfeiting more difficult
offcenter the portrait put watermark in bills 5 and up color shifting ink put security strip in micro printing
who investigates counterfeiting
secret service
what do the 7 board of goveners control
interest rates
inflation
money and supply
branch that protects all of us when money runs out
FDIC
oversee banking industry in our country
FCC
taking your resources and redirecting them to higher prices
invest
helps you find out how quickly your money will double
interest rate/72
rule of 72
when your interest earns interest
compound interest
the riskier the investment, the higher/ lower the ceiling
risk
helps you to save your money
financial planner
picture of all types of investments
portfolio
economic indicator of 30 largest companies in america and how they are doing
dou jones industrial average
methods to invest money
play the stock market diversification buying land rental properties bonds treasury bond municipal bond junic bonds
choose different types of stocks
diversification
keeps track of stocks for top 500 companies
S and P 500
standard and pores
take a long time to mature
backed by US gov
bonds
bought in larger amounts
treasury bond
used for larger projects
municipal bond
more risky bond
junic bonds
6 month- 5 year programs
certificates of deposit
money taken out of paycheck
mutual funds
overall return you get
capital gains
what you had lost
capital loss
