Reading Notes - Chapter 2 Flashcards
virtual currency = ?
unregulated digital money issued and controlled by decentralised developers used for electronic payments
e.g., cryptocurrency
cryptocurrency = ?
a decentralised and unregulated digital money that uses cryptocurrency to operate electronic payment transactions
digital currency = ?
an electronic asset in digital form accepted for making payments for goods/services & debts
bitcoin = ?
a cryptocurrency that uses a ledger system technology called the blockchain for handling transactions
individual net worth = ?
the sum of an individual’s money, real assets & financial assets minus the individual’s debt obligations
physical money = ?
coin, notes/paper used to purchase goods/services and settle debts
when was the dollar adopted by US Congress?
1785
bimetallic standard = ?
monetary standard based on two metals, usually silver & gold
full-bodied money = ?
coins that contain the same value in metal as their face value
how did money link with gold & silver?
gold & silver were used as a medium of exchange
token coins = ?
coins containing metal of less value than their stated value
when did gold production as a medium of exchange stop?
1933
when was monetary gold prohibited in the US?
1934
when were restrictions on gold exchange aleviated?
1975
representative full-bodied money = ?
paper money fully backed by precious metal
gold certificates = ?
certificates that could be used to redeem gold - ‘as good as gold’
fiat money = ?
paper money proclaimed to be legal tender by the government for making payments and discharging debts
credit money = ?
money backed by the creditworthiness and taxing capabilities of the issuer
is fiat money a form of credit money?
yes
deposit money = ?
electronic money backed by the creditworthiness of the depository institution that issued the deposit
automatic transfer service accounts?
ATS accounts
provide for direct deposits to, and payment from checkable deposit accounts
where employers deposit employees’ salaries into; checking accounts
debit cards = ?
provide for immediate direct transfer of deposit amounts
MMMFs = ?
money market mutual funds
issue shares to customers and invest the proceeds in highly liquid, very short maturity, interest-bearing debt instruments
credit cards = ?
provide predetermined credit limits to consumers when the cards are issued
currency exchange rate = ?
value of one currency relative to another
gross domestic output (GDP) = ?
a measure of the output of goods & services in an economy
velocity of money (VM) = ?
the rate of circulation of the money supply
what are the major types of money market securities?
treasury bill
commercial paper
negotiable certificate of deposits
banker’s acceptance
repurchase agreement
federal funds
treasury bill = ?
short term debt obligation issued by the government
commercial paper = ?
short term unsecured promissory note issued by high quality corporations
negotiable CDs = ?
short term debt instrument issued by depository institutions
bankers acceptance = ?
promise of future payment issued by a firm and guaranteed by a bank
repurchase agreement = ?
short term debt security where the seller agrees to repurchase the security at a specific time & price
federal funds = ?
short term loans typically for 1-day to 1-week made between depository institutions
in 1944, what were exchange rates between currencies like?
they were fixed relative to the US dollar or gold
when and how was the ‘euro’ originated?
in 1999, EU countries unified to create the euro currency which is administered by the european central bank
