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Midterms - Applied Ec - Part 9

Terms

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FDIC
the government program responsible for insuring deposits
consumer price index
a measure of inflation by tracking the price of a "basket" of consumer goods
fractional reserve
banks must hold a portion of their deposits in a _______ to ensure that enough money is on hand to cover withdrawals, and to limit how much bank money can be created
property owners, borrowers, the government
who wins from inflation?
currency
money in the form of bills and coins; printed at a mint and issued by the central bank
cost-push
a type of inflation that involves a sudden price increase or drop in quantity of key resources; this causes prices to jump
commodity currency
a type of currency made of precious substance (gold, rice, shells, whatever)
monetary system
a system where people trade directly by using money
inflation
a general rise in price levels that measures cost of living and health of economy
demand deposit
any bank account from which money can be withdrawn on demand
store of value
money stores purchasing power for the future because it's a _____________
commercial banks
banks that earn profits, provide savings, checking, and credit services, offer financial services like money orders and deposit boxes
barter system
a system where people trade directly without using money
purposes of money
a medium of exchange, a standard of value/unit of account, store of value
loaning
commercial banks create money by _____ money to people who use it to open other bank accounts
fixed income, lenders, savers
who loses from inflation?
standard of value (/unit of account)
money can be used to measure the value of things (its a common measure of value) because it's a ________
bank money
money in the form of bank accounts (money orders, checks, etc.); it's created when money is deposited into an account
characteristics of currency
unique, recognizable, durable, scarce, portable
federal reserve system
the central bank of the us
demand-pull
a type of inflation where there's too much money that causes people to big prices up
medium of exchange
money can be used for buying and selling because it's a ________
lower
the more money there is in circulation, the ____ its value will be
central bank
the bank that controls the money supply, acts as a clearing house for checks, and regulates and serves other banks and financial institutions
fiat currency
a type of currency that's only valuable by legal decree
representative currency
a type of currency that represents a certain amount of precious metal on reserve by a government bank

Deck Info

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