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topic 6 words Flashcards

1
Q

What is money?

A

Anything that serves as a medium of exchange, a unit of account, and a store of value.

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2
Q

Define medium of exchange.

A

Anything that is used to determine value during the exchange of goods and services.

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3
Q

What is barter?

A

The direct exchange of one set of goods or services for another.

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4
Q

What does unit of account mean?

A

A means for comparing the values of goods and services.

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5
Q

What is store of value?

A

To keep value when held onto or stored instead of spending.

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6
Q

What is currency?

A

Anything used as money; today we use coins and paper bills as money.

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7
Q

Define commodity money.

A

Consists of objects that have value in and of themselves and that are also used as money.

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8
Q

What is representative money?

A

Makes use of objects that have value solely because the holder can exchange them for something else of value.

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9
Q

What are specie?

A

Coins made of gold or silver that one could be given in exchange for paper money.

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10
Q

Define fiat money.

A

Has value because a government has decreed that it is an acceptable means to pay debts.

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11
Q

What is a bank?

A

An institution for receiving, keeping, and lending money.

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12
Q

What is a national bank?

A

A bank chartered, or licensed, by the federal government.

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13
Q

What are bank runs?

A

Widespread panics in which great numbers of people try to redeem their paper money at the same time.

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14
Q

What are greenbacks?

A

The first paper currency issued by the U.S. Treasury since the Continental, printed in 1861.

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15
Q

What is the gold standard?

A

A monetary system in which paper money and coins had the value of certain amounts of gold.

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16
Q

Define central bank.

A

A bank that can lend to other banks in times of need.

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17
Q

What are federal reserve banks?

A

The central banks for their districts, created as many as 12 regional Federal reserve Banks.

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18
Q

What is monetary policy?

A

The actions that the Federal Reserve System takes to influence the level of real GDP and the rate of inflation in the economy.

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19
Q

What are reserves?

A

Deposits that a bank keeps readily available as opposed to lending them out.

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20
Q

Define reserve requirements.

A

The amount of reserves that banks are required to keep on hand.

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21
Q

What is check clearing?

A

The process by which banks record whose account gives up money and whose account receives money as a result of a customer writing a check.

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22
Q

What is a bank holding company?

A

A company that owns more than one bank.

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23
Q

What is the federal funds rate?

A

The interest rate that banks can charge each other for loans.

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24
Q

Define discount rate.

A

The interest rate that the Federal Reserve charges commercial banks for loans.

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25
What is money supply?
All the money available in the United States economy.
26
What does liquidity mean?
The ability to be used as, or directly converted into, cash.
27
What are demand deposits?
Money in a checking account that can be paid 'on demand,' or at any time.
28
What are money market mutual funds?
Funds that pool money from small savers to purchase short-term government and corporate securities.
29
Define fractional reserve banking.
A banking system that keeps only a fraction of its funds on hand and lends out the remainder.
30
What does default mean?
To fail to pay back a loan.
31
What is a mortgage?
A specific type of loan that is used to buy real estate.
32
What are credit cards?
A card entitling its owner to buy goods and services based on the owner's promise to pay for those goods and services.
33
Define interest.
The price paid for the use of borrowed money.
34
What is principal?
The amount of money borrowed.
35
What is a debit card?
A card used to withdraw money from a bank.
36
Who is a creditor?
A person or institution to whom money is owed.
37
Define investment.
The act of redirecting resources from being consumed today so that they may create benefits in the future.
38
What is a financial system?
The network of structures and mechanisms that allows the transfer of money between savers and borrowers.
39
What are financial assets?
A claim on the property or income of a borrower.
40
Define financial intermediaries.
An institution that helps channel funds from savers to borrowers.
41
What is a mutual fund?
An organization that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets.
42
What is a hedge fund?
A private investment organization that employs risky strategies that often make huge profits for investors.
43
Define diversification.
The strategy of spreading out investments to reduce risk.
44
What are portfolios?
A collection of financial assets.
45
What is a prospectus?
An investment report that provides information to potential investors.
46
What is return?
The money an investor receives above and beyond the sum of money initially invested.
47
What does coupon rate refer to?
The interest rate that a bond issuer will pay to the bondholder.
48
Define maturity in finance.
The time at which payment to a bondholder is due.
49
What is par value?
A bond's stated value, to be paid to the bondholder at maturity.
50
What is yield?
The annual rate of return on a bond if the bond is held to maturity.
51
What are savings bonds?
A low-denomination bond issued by the United States government.
52
What is an inflation-indexed bond?
A bond that protects the investor against inflation by its linkage to an index of inflation.
53
What are municipal bonds?
A bond issued by a state or local government or a municipality to finance a public project.
54
Define corporate bonds.
A bond issued by a corporation to help raise money for expansion.
55
What are junk bonds?
A bond with high risk and potentially high yield.
56
What are capital markets?
A market in which money is lent for periods longer than a year.
57
What are money markets?
A market in which money is lent for periods of one year or less.
58
What are primary markets?
A market for selling financial assets that can be redeemed only by the original holder.
59
What are secondary markets?
A market for reselling financial assets.
60
What is a share?
A portion of stock.
61
What is capital gain?
The difference between the selling price and purchase price that results in a financial gain for the seller.
62
What is capital loss?
The difference between the selling price and purchase price that results in a financial loss for the seller.
63
What is a stock split?
The division of each single share of a company's stock into more than one share.
64
Who is a stockbroker?
A person who links buyers and sellers of stock.
65
What are brokerage firms?
A business that specializes in trading stocks.
66
What is a stock exchange?
A market for buying and selling stock.
67
What are futures?
A contract to buy or sell commodities at a particular date in the future at a price specified today.
68
What are options?
Contracts that give investors the right to buy or sell stock and other financial assets at a particular price until a specified future date.
69
What is a call option?
A contract for buying a stock at a particular price until a specified future date.
70
What is a put option?
A contract for selling stock at a particular price until a specified future date.
71
Define bull market.
A steady rise in stock prices in general over a period of time.
72
What is a bear market?
A steady drop or stagnation in stock prices in general over a period of time.
73
What does speculation involve?
The practice of making high-risk investments with borrowed money in hopes of getting a big return.
74
What are member banks?
Banks that belong to the Fed.
75
Who supervises the Federal Reserve Banks?
A Federal Reserve Board appointed by the President of the United States.
76
What are short-term loans?
Loans allowed for member banks to borrow money to meet short-term demands.
77
What are Federal Reserve Notes?
The national currency we use today in the United States.
78
What are foreclosures?
The seizure of property from borrowers who are unable to repay their loans.

topic 6 (1 decks)

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