Economics Topic 6 Vocabulary
Member Banks
a bank that belongs to the Federal Reserve System
Corporate Bond
a bond issued by a corporation to help raise money for expansion
Municipal Bond
a bond issued by a state or local government or a municipality to finance a public project
Junk Bond
a bond with high risk and potentially high yield
Federal Reserve Board
a group of supervisors appointed by the President who overlook the Federal Reserve System
Unit of Account
a means for comparing the values of goods and services
Hedge Fund
a private investment organization that employs risky strategies to try and make huge profits for investors
Money Supply
all the money available in the US economy
Mutual Fund
an organization that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets
Medium of Exchange
anything that is used to determine value during the exchange of goods and services
Money
anything that serves as a medium of exchange, a unit of account, and a store of value
Currency
coins and paper bills used as money
Reserves
deposits that a bank keeps readily available as opposed to lending them out
Fiat Money
objects that have value because the government has decreed that they are an acceptable means to pay debts
Representative Money
objects that have value because the holder can exchange them for something else of value
Commodity Money
objects that have value in and of themselves and that are also used as money
Store of Value
something that keeps its value if it is stored rather than spent
Monetary Policy
the actions that the Federal Reserve System takes to influence the level of real GDP and the rate of inflation in the economy
Principal
the amount of money borrowed
Reserve Requirements
the amount of reserves that banks are required to keep on hand
Federal Reserve Banks
the central banks in the 12 districts created by the Federal Reserve System
Barter
the direct exchange of one set of goods or services for another
Federal Funds Rate
the interest rate that banks charge each other for loans from federal funds
Discount Rate
the interest rate that the Federal Reserve charges commercial banks for loans
Federal Reserve Notes
the national currency in the US that was created by the Federal Reserve System
Speculation
the practices of making high-risk investments with borrowed money in hopes of getting a big return
Interest
the price paid for the use of borrowed money
