Chapter 11 Flashcards Preview

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Flashcards in Chapter 11 Deck (13):
1

Definition of Money

Anything generally accepted in exchange for goods or services

2

Medium of exchange

The primary function of money, which is to facilitate transactions and lower transaction costs

3

Barter

Direct exchange of goods and services without the use of money

4

Measure of value

Money is a common guide line of worth allowing for the comparison of goods and services independent value

5

Store of value

How money provides a means of saving or accumulating purchasing power from the present and transferring it to the future

6

Means of deferred payment

The attribute of money that makes it easier to borrow and to repay loans

7

Currency

Consists of coins and bank notes that an institution or government has created to be used in the trading of goods and services and the payment of debts

8

Legal tender

Refers to coins and banknotes officially declared to be acceptable for the settlement of debts incurred in financial transactions

9

Fiat money

A means of exchange established by government declaration

10

Demand deposits

Balances in bank accounts that depositors can access on demand

11

Savings deposits

Financial institution accounts containing funds that can not be directly used for payments

12

Liquidity

The ease with which one asset can be converted into another asset or into goods and services

13

M2

Currency outside chartered banks plus demand and savings deposits at chartered banks