Chapter 2 Vocabulary

Terms	Definitions
Currency	All media of exchange circulating in a country.
Federal Reserve Act of 1913	Created a system to stabilize the banking system.
Reserve Liquidity	Ways to convert reserves readily to cash.
Margin	Stock bought for a fraction of its price and resold at a profit without the full purchase price of the stock ever having been paid.
Bank Run	Occurs when many people try to withdraw their money at once.
Federal Deposit Insurance Corporation (FDIC)	Guarantees deposits against bank failures up to $100,000 per depositor, per bank, and sometimes even more for special kinds of accounts or ownership categories.
Inflation	Occurs when rising prices decrease the value of money.
Stagflation	Condition of slow economic growth and high unemployment.
Recession	Occurs when there is a decline in total production lasting a minimum of two consecutive quarters (at least six months).
Great Depression	The worst and longest economic crisis of Western industrialized nations during the twentieth century; it began in 1929 and extended worldwide until about 1939.

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