| A | B |
|---|
| money | anything used as a medium of exchange, a unit of accounting, & a store of value |
| medium of exchange | function of money where the seller will accept it as payment for a good or service |
| barter | exchange of goods or services; done prior to money |
| double coincidence of wants | necessary for barter to work |
| unit of accounting | function of money where it can be used to compare the value of goods in relation to one another |
| store of value | function of money where we can use money over time |
| durable | money must be able to withstand wear & tear of being passed from one person to another |
| portable | easily able to be carried around |
| scarcity | makes money valuable |
| commondity money | has value as item; like cattle or gems |
| representative money | money backed by or exchangeable for gold or silver |
| fiat money | shows face value so that it is legal tender |
| Congress | has the power to coin money and set standards of weights and measures |
| Federal Reserve System | created in 1913 to control the nation's economy |
| expansion | point of the business cycle where the economy is growing |
| peak | the height of the business cycle |
| recession | a decrease in business activity that lasts 6 months |
| trough | lowest point in the business cycle |
| Bureau of Engraving & Printing | issues all Federal Reserve Notes (paper money) |
| Board of Directors | direct operations of the Fed. 7 full time members |
| President & Congress | appoint and approve Board of Directors |
| selling securities (treasury bills) | most common tool used by the Fed to control the economy |
| regulate money supply | job of the Fed |
| central bank | an institution that lends money to other banks also the place where the govt does its banking |
| Federal Open Market Committee | the most powerful committee of the Fed which makes decision that affect the economy as a whole by manilpulating the money supply |
| manipulate | to make changes to a something for a desired effect |
| discount rate | the interest rate that the Fed chrges onits loans to financial instittutions |
| reserve requirement | the percentage of a deposit the banks have to set aside as cash in their own vaults or as deposis in their Federal Reserve district bank |
| Certificate of deposit (CD) | a timed deposit that states the amount of the deposit maturity and rate of interest being paid |
| money market account | a type of savings account that pays interest but also allows customers to write checks against the account |
| savings account | an account that pays interst on deposits but allows customer to withdraw money at any time |
| checking account | an account where money can be withdrawn at any time by writing a check |
| FDIC | insures all personal savings accounts up to $250,000 per person per institution |
| currency | both coin and paper bills |
| coin | metallic form of money; particularly durable |
| medium | a way to carry out an action |
| credit unions | non profit cooperative financial institutions |
| Savings and Loans | lend people money for homes and cars; center of a financial crisis; eventually brought under the FDIC |
| commercial banks | offer full financial services to consumer and businesses |
| making loans | way that banks make money |
| interest | the amount of money charged to borrow money; calculated as a percent |
| purpose | term of loan that states what you need the money for ( house, car) |
| length of time | term of loan which might be 5 years for a car or 30 years for a house |
| rate of interest | term of loan that determines how much you will pay the lender in order to borrow the money |
| amount | term of the loan that is how much you want to borrow |
| Great Depression | world event that caused many banks to fail; FDIC came about as a result of this |
| FDR | President during the later part of the Great Depression whose New Deal programs helped the banking industry as well as many other industries |
| advisory councils | give advice to the Board of Governors on consumer borrowing, banking system and savings and loans |
