ECON 2105: FINAL EXAM
18 Cards in this Set
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Money
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The set of assets in an economy that people regularly use to buy goods and services from other people.
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Medium of Exchange
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an item that buyers give to sellers when they want to purchase goods and services.
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Unit of Account
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the yardstick people us to post prices and record debts.
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Store of Value
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an item that people can use to transfer purchasing power from the present to the future.
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Liquidity
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the ease with which an asset can be converted into the economy's medium of exchange.
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Commodity Money
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money that takes the form of a commodity with intrinsic value
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Fiat Money
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money without intrinsic value that is used as money because the government decree.
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Currency
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the paper bills and coins in the hands of the public
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Demand Deposits
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balances in bank accounts that depositors can access on demand by writing a check.
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Federal Reserve
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the central bank of the U.S.
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Central Bank
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an institution designed to oversee the banking system and regulate the quantity of money in the economy.
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Money Supply
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the quantity of money available in the economy.
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Monetary Policy
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the setting of the money supply by policymakers in the central bank
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Reserves
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deposits that banks have received but have not loaned out.
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Fractional-Reserve Banking
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a banking system in which banks hold only a fraction of deposits as reserves.
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Reserve Ratio
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the fraction of deposits that banks hold as reserves
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Money Multiplier
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the amount of money the banking system generates with each dollar of reserves.
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Open-Market Operations
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the puchase and sale of U.S. government bonds by the Federal Reserve.
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ECON 2105: FINAL