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Financial Markets: Chapter 2
Terms in this set (20)
A system of exchange in which individuals trade goods and services directly for other goods and services.
A promise to pay on demand money deposited with a bank or other financial institution.
A good used as money that has value independent of its use as money.
Digital cash people use to buy goods and services over the Internet; short for electronic money.
Money, such as paper currency, that has no value apart from its use as money.
Extremely high rates of inflation, exceeding 50% per month.
The government designation that currency is accepted as payment of taxes and must be accepted by individuals and firms in payment of debts.
A narrow definition of the money supply: The sum of currency in circulation, checking account deposits, and holdings of traveler's checks.
A broad definition of the money supply: all the assets that are included in M1, as well as time deposits with a value of less than $100,000, savings accounts, money market deposit accounts, and non-institutional money market mutual fund shares.
Medium of Exchange
Something that is generally accepted as payment for goods and services; a function of money.
A measure of the quantity of money that is broader than currency, M1 and M2 are monetary aggregates.
Anything that is generally accepted in payment for goods and services or to pay off debts.
The mechanism for conducting transactions in the economy.
Quantity Theory of Money
A theory about the connection between money and prices that assumes that the velocity of money is constant.
A system in which individuals produce the goods or services for which they have relatively the best ability.
Standard of Deferred Payment
The characteristic of money by which it facilitates exchange over time; a function of money.
Store of Value
The accumulation of wealth by holding dollars or other assets that can be used to buy goods and services in the future; a function of money.
The cost of a trade or a financial transaction, for example, the brokerage commission charged for buying or selling a financial asset.
Unit of Account
A way of measuring value in an economy in terms of money; a function of money.
The sum of the value of a person's assets minus the value of the person's liabilities.
THIS SET IS OFTEN IN FOLDERS WITH...
Financial Markets: Chapter 1
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