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anything customarily used as a medium of exchange, a unit of accounting, and a store of value

medium of exchange

use of money in exchange for goods and services


exchange of goods and services for other goods and services

unit of accounting

use of money as a yardstick for comparing the values of goods and services in relation to one another

store of value

use of money to store purchasing power for later use

commodity money

a medium of exchange such as cattle or gems that has value as a commodity or good aside from its value as money

representative money

money that is backed by an item of value, such as gold or silver

fiat money

money that has value because a government fiat, or order, has established it as acceptable for payment of debts

legal tender

money that by law must be accepted for payment of public and private debts

overdraft checking

checking account that allows a customer to write a check for more money that exists in his or her account

electronic funds transfer (EFT)

system of putting onto computers all the banking functions that in the past we handled on paper

automated teller machines (ATMs)

units that allow consumers to do their banking without the help of a teller

checking account

account in which deposited money can be withdrawn at any time by writing a check

checkable deposits

money deposited in a bank that can be withdrawn at any time by presenting a check

thrift institutions

mutual savings banks, S&Ls, and credit unions that offer many of the same services as commercial banks

debit card

device used to make cashless purchases; money is electronically withdrawn from the consumer's checkable account and transferred directly to the store's bank account

near moneys

assets, such as savings accounts, that can be turned into money relatively easily and without the risk of loss of value


narrowest definition of the money supply; consists of moneys that can be spent immediately and against which checks can be written


broader definition of the money supply; includes all of M1, plus such near moneys as money market mutual fund balances, certificates of deposit, and Eurodollars

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