Chapter 15: Money and Banking

Terms in this set (37)

anything of value that is accepted in return for goods/services

to exchange one good or service for another

type of document guaranteeing the payment of a specific amount of money, either on demand, or at a set of time with the payer named on the document

type of financial investment issued by a corporation, government or other organization

government bond

security that pays interest over terms of 10-30 years

security that pays interest over terms ranging from 2-10 years

security that matures in a year or less

medium of exchange

money used in exchange for G/S needed by individuals, business and governments

money that is common measure of the worth or price of a G/S

money can be saved and used at a later date

value of money must maintain its value over time in order for it to be widely accepted

properties of money

characteristics include being stable, recognized, divisible, portable and durable

Federal Reserve Bank

The United States central bank

monetary system

mechanism a nation uses to provide and manage money for itself

monetary policy

action taken to manage the supply of money and interest rates in an economy

provides insurance for depositors in insured banks

financial exchange

process of transferring money from one individual or organization to another

plastic card that allows the holder to make credit purchases up to an authorized amount

Types of financial exchange

Include cash, credit cards, debit cards, electronic funds transfer (EFT)

allows customers to pay for purchased directly from their checking account

electronic funds transfer (EFT)

transfer of money from one back account to another

financial institution

any organization that provides services related to money

depository institution

financial institution that accepts money from customers and deposits it into the customer's account

money placed into an account

commercial bank

largest category of deposit institution

nonprofit financial institution that is privately owned and provides banking services for its members

savings and loan institution

financial institution that offers savings and loan services.

nondepository institution

financial institution that does not accept deposits

insurance company

for-profit business that primarily sells insurance products. Protection for customers from risks that can result in financial distress, such as accidents and death.

securities firm

financial institution that is involved in trading securities in financial markets.

investment bank

financial institution that provides services for businesses...they help raise money for expansion or maintenance of a business.

finance company

financial institution that makes money by issuing loans.

checking account

bank account that allows the account owner to make deposits, write checks and withdraw money

written order for the bank to pay a specific amount to the person or organization to which the check is written

savings account

bank account used by depositors to accumulate money for future use

prearranged amount of credit that is available for a business to use as needed

letter of credit

document guaranteeing that a buyer will pay the seller the agreed-upon amount and within the time specified

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