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| Anything that is generally acceptable in return for goods and services sold |
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| A system in which goods and services are traded directly for other goods and services |
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| The theory that "bad," or debased, money drives "good," or undebased, money out of circulation |
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| Paper money issues by commercial banks |
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| A currency standard whereby a country' currency is convertible into gold at a fixed rate of exchange |
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| Paper money or coinage that is neither backed by nor convertible into anything else but is decreed by the government to be accepted as legal tender |
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| Money held by the public in the form of deposits with commercial banks |
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| A bank that acts as banker to the commercial banking system and often to the government as well. Usually a government-owned institution that controls the banking system and is the sole money-issuing authority. |
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| A privately owned, profit-seeking institution that provides a variety of financial services, such as accepting deposits from customers and making loans and other investments |
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| An institution in which interbank indebtedness, arising from the transfer of cheques between banks, is computed and offset and net amounts owing are calculated |
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| A situation in which many depositors rush to withdraw their money, possibly leading to a bank's financial collapse |
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| Fractional-Reserve System |
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Definition
| A banking system in which commercial banks keep only a fraction of their deposits in cash or on deposit with the central bank |
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| The fraction of its deposits that a commercial bank holds as reserves in the form of cash or deposits with the central bank |
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| The fraction of its deposits that a commercial bank wants to hold as reserves |
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| Reserves held by a commercial bank in excess of its target reserves |
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| The total quantity of money in an economy at a point in time. Also called the supply of money |
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Definition
| An interest-earning bank deposit, subject to notice before withdrawal |
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| Currency plus deposits at the chartered banks |
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| M2 plus deposits at other financial institutions |
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| Liquid Assets that are easily convertible into money without risk of significant loss of value and can be used as short-term stores of value but are not themselves media of exchange |
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| Something that serves as a medium of exchange but i not a store of value |
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| The value now of one or more payments or receipts made in the future; often referred to as discounted present value |
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| The total amount of money balances that the public wants to hold for all purposes |
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Definition
| A situation in which the demand for money equals the supply of money |
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Term
| Monetary Transmission Mechanism |
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Definition
| The channels by which a change in the demand for or supply of money leads to a shift of the aggregate demand curve |
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Definition
| The idea that a change in the supply of money has no effect on any real variables but only affects the price level |
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