Create an account
medium of exchange
anything that is used to determine value during the exchange of goods and services
objects that have value in and of themselves and that are also used as money ex. salt, cattle, gems
objects that have value because the holder can exchange them for something else of value ex. IOUs
objects that have value because the government has decreed that they are acceptable means to pay debts ex. dollar bills
a monetary system in which paper money and coins had the value of certain amounts of gold
money market mutual fund
a fund that pools money from small savers to purchase short-term government and coporate securities
fractional reserve banking
a banking system that keeps only a fraction of its funds on hand and lends out the remainder
a card entitling its owner to buy goods and services based on the owner's promise to pay for those goods and services
the actions that the Federal Reserve System takes to influence the level of real GDP and the rate of inflation in the economy
the process by which banks record whose account gives up money and whose account receives money when a customer writes a check
money multiplier formula
a formula (cash deposit/RRR) used to determine how much new money can be created with each demand deposit and added to the money supply
open market operations
buying and selling of government securities in order to alter the supply of money
the belief that the money supply is the most important factor in macroeconomic performance
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