Macroeconomics Chapter 11

discount window

an instrument of monetary policy that allows eligible institutions to borrow money from the central bank; usually on a short term basis

medium of exchange

an item that buyers give to sellers when they want to purchase goods and services

store of value

an item that people use to transfer purchasing power from the present to the future

Intrinsic value

an item would have value, even if not used as money

during wars, the public tends to hold relatively more currency and relatively few deposits. This decision makes reserves...

and the money supply decrease

bank run

depositors who try to withdrawal their money from a bank because they think it will fail

the existence of money leads to...

greater specialization and a higher standard of living

commodity money

money that takes the form of a commodity with intrinsic value

fiat money

money without intrinsic value that is used as money because of government decree

fractional reserve banking

practice where banks reserve only a fraction of their customers deposits

money

the set of assets in an economy that people regularly use to buy goods and services from other people

unit of account

the yardstick people use to post prices and record debts