Ch.11 Flashcards
(38 cards)
Economics 12
Chapter 11 Vocabulary
asset
Anything that is owned by a business, company, or government.
balance sheet
A snapshot of the financial health of a business such as a bank, recording its assets and liabilities.
bank deposit money
Money composed of people’s deposits and loans granted by the banks, exchangeable by cheque or electronic transfer.
branch banking
A banking system, such as Canada’s that restricts the number of banks that can operate, but allows them to have as many branches as they want.
cash drain
The proportion of a bank deposit that a person chooses to hold in cash outside the bank, reducing the bank’s excess reserves and thus its ability to lend.
chartered bank
A bank established by a charter passed by the Canadian federal government.
chequing account
An account that serves primarily as a medium of exchange, paying little or no interest.
commodity money
Money that has value in itself such as cattle, wheat, or salt.
currency
Coins and notes that compose the money supply of an economy.
current account
A bank account for a business that operates like a chequing account, paying little or no interest and serving as a medium of exchange; also, part of a balance of payments account that records totals for three components: goods, services, and investment income.
demand deposit
Bank deposits (such as chequing accounts) that can be used to make immediate payment.
deposit (or money) multiplier
The amount by which a change in the monetary base is multiplied to determine the resulting change in the money supply; also called money multiplier.
double conincidence of wants
The problem of barter: for a trade to occur, both parties must want what the other is willing to trade.
electronic money
Money in electronic networks, or cash cards that can be used by consumers.
excess reserves
The amount of cash over and above what is needed to meet demand from depositors and so can be lent.
fiat money
Money that represents value because governments have declared it to be legal tender, not because it is valuable in itself or exchangeable for gold.
fractional reserve banking
The discovery made by goldsmiths that they could lend much of the gold depostied with them for safe keeping because only a fraction of it was ususally withdrawn by the depositors.
gold standard
A promise by a government that it will exchange gold for the national currency on demand.
legal tender
Money that a government has declared must be accepted within the national economy as payment for goods and services.
liability
Anything owned by an individual, a business, or a government.
liquidity
The relative ease with which an asset can be used to make a payment. Money is the most liquid asset.
M1
The narrowest measurement of the money supply, comprising cash in circulation along with chequing and current accounts.
M2
A larger measurement of the money supply than M1, Comprising M1 plus all types of personal savings accounts, term deposits, and non-personal notice deposits.
