Why is money important cid 127 Money Anything that people generally accept as payment for goods and services Barter The direct trading of goods and services for other goods or services The fed cid 127 Money supply The amount of money the Federal Reserve Bank makes available for people to buy goods and services different ways of referring to the US money supply cid 127 M1 Money that can be accessed quickly and easily coins and paper money checks etc cid 127 M2 Money included in M1 plus money that may take a little more time to obtain savings accounts money market accounts mutual funds certificates of deposit etc cid 127 M3 M2 plus big deposits like institutional money market funds Reserve requirement A percentage of commercial banks checking and savings accounts that must be physically kept in the bank cid 127 Open market operations They buying and selling of U S government bonds by the Fed with the goal of regulating the money supply Discount rate The interest rate that the Fed charges for loans to member banks 1 of 2 interest rates the Fed controls the other is the Federal funds rate the rate banks charge each other The US banking system then uses some of these funds to make loans Commercial bank A profit seeking organization that receives deposits from individuals and corporations in the form of checkin and savings accounts and demand deposit A technical name for a checking account the money in a demand deposit can be withdrawn anytime on demand from the depositor Time deposit The technical name for a savings account the bank can require prior notice before the owner withdraws money from a time deposit certificate of deposit A time deposit savings account that earns interest to be delivered at the end of the certificate s maturity date Savings and loan association A financial institution that accepts both savings and checking deposits and provides home mortgage loans Credit unions Nonprofit member owned financial cooperatives that offer the full variety of banking services to their members no federal income tax huge advantage Nonbanks Financial organizations that accept no deposits but offer many of the services provided by regular banks pension funds insurance companies commercial finance companies consumer finance companies and brokerage houses Pension funds Amounts of money put aside by corporations nonprofit organizations or unions to cover part of the financial needs of members when they How the government protects our money Federal Deposit Insurance Corporation FDIC An independent agency of the US government that insures bank deposits The Savings Association Insurance Fund SAIF The part of the FDIC that insures holders of accounts in savings and loans associations The National Credit Union Administrations NCUA Making banking more efficient by using technology and receiving paychecks electronic funds transfer EET system A computerized system that electronically performs financial transactions such as making purchases paying bills debit card An electronic funds transfer tool that serves the same function as check it withdraws funds from a checking account Smart card An electronic funds transfer tool that is a combination credit card debit card phone card drivers license cards and more International banking and banking services Letter of credit A promise by the bank to pay the seller a given amount if certain conditions are met For example the german company may not be paid until the goods have arrived at the US companies warehouse A banker s acceptance A promise that the bank will pay some specified amount at a particular time cid 127 World Bank The bank primarily responsible for financing economic development also known as the Internation Bank for Reconstruction and Development International Monetary Fund IMF Organization that assists the moth flow of money among nations Nonbanks retire pg 558 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127
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