Money & Banking

Anything that's accepted in exchange for goods & services.

• Currency

• Money

• Liquidity

• Deferred Payment

Coins and paper that are used as money; 'legal tender'.

• Money

• Transfer Payments

• Currency

• Liquidity

Money is used because:

• It serves as a unit of account

• Good 'store of value'

• Makes lending and borrowing easy, compared to using 'things'

• All of the above

The ease with which an asset can be converted into payment for goods & services.

• Medium of Exchange

• Legal Tender

• Liquidity

• Banking

The most liquid of assets:

• M1

• M2

• Currency

• Fiat Money

Includes less liquid assets:

• M1

• M2

• Currency

• Debit Card

Savings account, Money Market Fund, CD (time deposit)

• Less Liquid

• Most Liquid

Financial Institutions include:

• Banks

• Savings & Loans

• Credit Unions

• All of the above

A certain % of checkable deposits that banks keep on reserve.

• Reserve Requirement

• Excess Reserves

• Savings

• Fractional Reserve

The amount banks hold beyond required reserve; amount that banks can lend.

• Reserve Requirement

• Excess Reserves

• Multiplier

• Expansionary Effect