Shared Flashcard Set

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Chapter 11- 13
Economics 203 Nelson
16
Economics
Undergraduate 2
04/08/2008

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Cards

Term
Money vs. Wealth
Definition

Money: assets that can easily be used to buy things (dollar bills)

Wealth: The accumulation of assets

Term

Money

Definition
The set of assets in an economy that people regularly use to buy goods and services from other people
Term
medium of exchange
Definition
an item that buyers give to sellers when they want to purchase goods and services.
Term
Barter is problematic because of the problem of...
Definition
double coincidence of wants
Term
What solves the double coincidence?
Definition
Money
Term
unit of account
Definition
the yardstick people use to post prices and record debts.
Term
store of value
Definition
an item that people can use to transfer purchasing power from the present to the future
Term
Why is money an imperfect store of value?
Definition
Money loses value during times of inflation.
Term
Liquidity
Definition
The ease with which an asset can be converted into the economy's medium of exchange.
Term
what is the most liquid asset?
Definition
Money
Term
commodity money
Definition
money that takes the form of a commodity with intrinsic value. ex: gold coins.
Term
fiat money
Definition
money without intrinsic value that is used as money because of government decree.
ex: our dollars in the U.S.
Term
Money Stock
Definition
The quantity of money circulating in the United States
Term
Currency
Definition
The paper bills and coins in the hands of the public. ex: "in circulation"
Term
demand deposits
Definition
balances in bank accounts that depositors can access on demand by writing a check
Term
M1
Definition
measurement of money containing the most liquid items. ex: currency, demand deposits, traveler's checks.
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