Economics Chapter 10

representative money

Money that is backed by something tangible

Portability

Physical property of money

medium of exchange

The means through which goods and services are produced are called

standard of value

The measurement of economic worth in the exchange process

Which economic property of money refers to its use as a medium of exchange?

acceptability

money

anything that people will accept in exchange for goods and services

A major result of bank deregulation in the 1980s and 1990s was hundreds of

bank mergers

scarcity

economic property of money

From 1836 to 1863, there was no national oversight of banking. What was the result?

financial panics and economic instability

Which of the following allows banks to create money by making loans?

fractional reserve banking

The two original purposes of savings and loans were to take savings deposits and provide

home mortgage loans

Compound interest provides an additional incentive to save because

interest is applied to accumulated interest as well as the initial deposit

For what purpose was the First Bank of the United States created?

issue a national currency, control the money supply, and lend money

representative money

money backed by an item of value, such as salt, olive oil, gold, and silver

commodity money

money that has intrinsic value based on the material from which it is made

Fiat Money

money that is declared by the government to have worth

commodity money

money whose value us based on the type of material from which it is made

fiat money

money without intrinsic value and is used by government decree

currency

paper money and coins

A mortgage allows a consumer to

purchase a house without paying the whole value up front

near money

savings accounts and time deposits that can be converted into cash relatively easily

store of value

something with the ability to hold value over time

The term electronic banking generally refers to the use of

the Internet and computers to do bank transactions at home

barter

the exchange of goods and services without using money

What is the purpose of the Federal Reserve System?

to make loans to banks, issue currency, and regulate the money supply