Unit 4 Money and Banking Vocabulary

Federal Reserve Bank

The system created as many as 12 regional banks throughout the country.

Federal Reserve Board

This has members that are appointed by the President of the U.S., and they supervise the Federal Reserve Banks.

National bank

A bank chartered, or licensed, by the federal government. It has the power to issue a national currency, manage the federal government's funds and monitor other banks throughout the country

Central bank

A bank that can lead to other banks in time of need

Bank Holding Company

A company that owns more than one bank

Short Term Loans

When each of the regional Federal Reserve Banks allowed member banks to borrow money to meet short-term demands. This helps prevent bank failures.

Gold standard

A monetary system in which paper money and coins had the value of certain amounts of gold. This set a definite value for the dollar.

Bank

An institution for receiving, keeping and leading money

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

Member Banks

Banks that belong to the Fed. They store some of their cash reserves at the Federal Reserve Bank in their district.

Currency

Coins and paper bills used as money

Specie

Coins made of gold and silver

Commodity money

Consists of objects that have value in and of themselves and that are also used as money for example salt and precious metals

Reserves

Deposits that a bank keeps readily available as opposed to lending them out

Greenbacks

Issued in 1861, it was the first paper currency issued by the United States Treasury after the continental. They were offcially called demand notes.

Fiat money

Legal tender has value because a government has decreed that it is an acceptable means to pay debts

Bank runs

Widespread panics in which great numbers of people try to redeem their paper money at the same time. This causes many banks to fail.

Representative money

Makes use of objects that have value solely because the holder can exchange them for something else of value

Store of value

Money keeps its value if you decide to hold on to or store it instead of spending it

The Monetary Policy

The actions that the Fed. takes to influence the level of real GDP and the rate of inflation in the economy

Reserve Requirement

The amount of reserves that banks are required to keep on hand

Federal Reserve Notes

The currency we use in the U.S. today, created by the Federal Reserve Bank System

Barter

The direct exchange of one set of goods and services for another

Federal Funds Rate

The interest rate that banks charge each other for these loans

Unit of account

The money which provides a means for comparing the values of goods and services

Check clearing

The process by which banks record whose account gives up money and whose account receives money as a result of a customer writing a check

Discount Rate

The rate that the Fed. Reserve charges for these loans

Foreclosures

The seize of property from borrowers who are unable to repay their loans