Flashcards in Money, Banking and Finance Test Deck (19)
What is money?
anything people will accept in exchange for goods and services.
Describe Medium of exchange.
-medium of exchange: allows for the precise and flexible pricing of goods and services; makes transactions convenient
What are the physical characteristics of money?
Durable, portable, divisible, and uniformity
What are the economic characteristics of money?
stability of value, scarcity, and acceptability
What are savings?
-income that is not used for consumption and allows you to save money for future expenses
What is the difference between saving and investment?
-Saving is income that is not used for consumption, it is saved up and added up over time to buy a particular product or service. It is not used for anything else.
-Investments is the use of income today for future benefit
What are stock indexes?
measure and report the change in prices of stocks and health of the market
What characterizes a bull market?
prices steadily rise
What characterizes a bear market?
prices steadily decline
What is a stock exchange?
A market in which securities are bought and sold
- the level of prices in a stock market
What is a mutual fund?
investment company gathers money from individual investors and purchases a wide range of financial assets
What is included in M1?
all physical money, such as coins and currency, as well as demand deposits, checking accounts and Negotiable Order of Withdrawal (NOW) accounts (not 100% sure about this one)
What is included in M2?
savings deposits, money market mutual funds and other time deposits, (not 100% sure about this one)
What is a timed deposit?
savings in a financial institution for a specific period of time
What is the most common type of timed deposit?
(CDs) Certificates of Deposit
What are credit unions?
cooperative saving and lending institutions that specialize in home mortgage and auto loans.
What are the three functions of money?
Medium of Exchange, Store of Value, and Standard of Value(unit of account)
Describe Store of Value
something that holds its value over time; can be stored and accepted wherever/whenever it is presented