Quiz 1 Flashcards
_____ is anything that people will accept as payment for goods and services
Money
A __________ is a mean through which goods and services can be exchanged
medium of exchange
______ is the exchange of goods and services without using money
Barter
A _____determines the economic worth in the exchange process
Standard of value
A_____ is something that holds its value over time
store of value
One situation where money does not function well as a store of value is when the economy experiences significant _____
inflation
______ is a sustained rise in the general level of prices
inflation
Physical Properties:
Durability
Portability
Divisibility
Uniformity
Economic Properties
Stability of value
Scarcity
Acceptability
Money draws its value from three possible sources
Commodity money
Representative money
Fiat money
_____ derives its value from the type of material from which it is composed
Commodity Money
The most common form of commodity money throughout history has been _____
coins made from precious metals
_____ is the paper money back by something tangible -gold or silver- that gives it value
Representative money
The earliest form of representative money were seen in the ______ Merchants, goldmills, and moneylenders began issuing receipts that promised to pay a certain amount of gold and silver
Middle Ages
These practices signal the beginning of widespread modern use of _____
paper money
_____ is declared by the government and accepted by citizens to have worth
Fiat money
The value of the US dollar was linked to the value of ____until 1971
gold
____ is paper money and coins
Currency
_____ are called demand deposits
Checking accounts
_____ are called so because funds in checking accounts can be converted into currency “on demand”
Demand deposits
_____ accounts are interest-bearing savings accounts against which drafts may be written accounts are interest-bearing savings accounts against which drafts may be written
Negotiable order withdrawal(NOW)
_____ are funds that people in a financial institution for a specific period of time in return for a higher interest rate which are often placed in a certificate of deposit (CD)
Time deposits
_____ place restrictions on the number of transactions you can make in a month and require you to maintain a certain balance in the account in order to receive a higher rate of interest
Money market accounts
___ is the narrowest measure of the money supply, consisting of currency, demand deposits, and other checkable deposits
M1
The elements of M1 are referred to as _____, which means that they are or can easily become currency
liquid assets
_____ is a broader measure of all the money supply, consisting of M1 plus various kinds of near money
M2
____includes savings accounts, small- denominational time deposits, and money market mutual funds
M2
