The Monetary System Flashcards
1
Q
Money
A
stock of assets that can be used readily to make transactions
Stores value and is unit of account
2
Q
fiat money
A
has no intrinsic value
3
Q
commodity money
A
has intrinsic value
4
Q
money supply
A
quantity of money available in the economy
5
Q
monetary policy
A
control over the money supply conducted by the Federal Reserve (central bank) using the purchase and sale of government bonds
6
Q
Reserves
A
the portion of deposits that banks have not lent
7
Q
100% reserve banking
A
a system in which banks hold all deposits as reserves
8
Q
Fractional-reserve banking
A
a system in which banks hold a fraction of their deposits as reserves. Banks can create money
