AP economics chapter 31 and 32 vocabulary
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| 737805899 | medium of exchange | usable for buying and selling goods and services | |
| 737805900 | unit of account | this is money and is a yardstick for measuring the relative worth of a variety of goods, services, and resources | |
| 737805901 | store of value | enables people to transfer purchasing power from the present to the future | |
| 737805902 | liquidity | the ease with which assets can be converted quickly into the most widely accepted and easily spent form of money, with little or no loss of purchasing power | |
| 737805903 | M1 | the narrowest definition of the U.S. money supply | |
| 737805904 | federal reserve notes | paper money | |
| 737805905 | token money | means the face value of any piece of currency is unrelated to it intrinsic value | |
| 737805906 | checkable deposits | money deposited in a bank that can be withdrawn at any time by presenting a check | |
| 737805907 | commercial banks | the primary depository institutions | |
| 737805908 | thrift institutions | savings and loan associations and mutual savings banks that accept deposits of households and businesses | |
| 737805909 | near monies | highly liquid financial assets that do not function directly or fully as a medium of exchange but can be converted into currency or checkable deposits | |
| 737805910 | M2 | this is a broader definition of money and consists of M1 and near monies | |
| 737805911 | savings accounts | interest-bearing financial institution accounts where people put money aside for future use | |
| 737805912 | money market deposit account | account that pays relatively high rates of interest, requires a minimum balance, and allows immediate access to funds | |
| 737805913 | time deposits | savings plans that require savers to leave their funds on deposit for certain periods of time | |
| 737805914 | money market mutual fund | a fund that pools money from small savers to purchase short-term government and corporate securities | |
| 737805915 | legal tender | something used as an official medium of payment | |
| 737805916 | federal reserve system | the central bank of the United States | |
| 737805917 | board of governors | governing body of the Federal Reserve System; consists of 7 full-time members; appointed by President of U.S.; each serves for 14 years; terms arranged so an opening occurs every 2 years and there is no Congressional approval required to serve and can not be reappointed once term expires | |
| 737805918 | federal reserve banks | The 12 banks chartered by the US government to control the money supply and perform other functions. | |
| 737805919 | federal open market committee | Twelve-member committee made up of the seven members of the Board of Governors; the president of the Federal Reserve Bank of New York; and, on a rotating basis, the presidents of four other Reserve Banks. The FOMC meets eight times a year to set Federal Reserve guidelines regarding the purchase and sale of government securities in the open market as a means of influencing the volume of bank credit and money in the economy. | |
| 737805920 | subprime mortgage loans | high-interest rate loans to home buyers with above-average credit risk | |
| 737805921 | mortgage backed securities | a bond-like debt instrument backed by a bundle of individual mortgages, whose interest and principal payments are collectively paid to the holders of the security | |
| 737805922 | securitization | process of slicing up and bundling groups of loans, mortgages, bonds, and other financial debts into new securities | |
| 737805923 | moral hazard | tendency for financial investors and financial services firms to take on greater risks because they assume they are partially insured against losses | |
| 737805924 | troubled asset relief program | A 2008 Federal government program that authorized the U.S. Treasury to loan up to $700 billion to critical financial institutions and other U.S. firms that were in extreme financial trouble and therefore at high risk of failure | |
| 737805925 | financial services industry | The broad category of firms that provide financial products and services to help households and businesses earn interest, receive dividends, obtain capital gains, insure against losses, and plan for retirement. Includes commercial banks, thrifts, insurance companies, mutual fund companies, pension funds, investment banks and securities firms. | |
| 737805926 | wall street reform and consumer protection act | a law that gave authority to the Federal Reserve System to regulate all large financial institutions, created an oversight council to look for growing risk to the financial system, establish a process for the Federal government to sell off the assets of large failing financial institutions, provided Federal regulatory oversight of asset-backed securities, and created a financial consumer protection bureau within the Fed | |
| 737805927 | fractional reserve banking system | banks keep a fraction of deposits as reserves and use the rest to make loans | |
| 737805928 | balance sheet | a financial statement that reports assets, liabilities, and owner's equity on a specific date | |
| 737805929 | vault cash | the currency a bank has in its vault and cash drawers | |
| 737805930 | required reserves | Reserves that a bank is legally required to hold, based on its checking account deposits | |
| 737805931 | reserve ratio | the fraction of bank deposits that a bank holds as reserves | |
| 737805932 | excess reserves | reserves that banks hold over and above the legal requirement | |
| 737805933 | actual reserves | the funds that a bank has on deposit at the federal reserve bank of its district (plus its vault cash) | |
| 737805934 | federal funds rate | interest rate banks charge each other for loans | |
| 737805935 | monetary multiplier | The multiple of its excess reserves by which the banking system can expand checkable deposits and thus the money supply by making new loans (or buying securities); equal to 1 divided by the reserve requirement Ex) The Reserve Requirement is $200.... 1/$200 |
