Chapter 15 Vocab
1. Money-anything customarily used as a medium of exchange, a unit of accounting, and
a store of value.
2. medium of exchange-use of money in exchange for goods or services.
3. barter-exchange of goods and services for other goods and services.
4. double coincidence of wants-situation resulting when each party to a transaction wants
exactly what the other person has to offer, allowing a direct exchange of goods; this is a
requirement for bartering.
5. unit of accounting-use of money as a yardstick for comparing the values of goods and
services in relation to one another.
6. store of value-use of money to store purchasing power for later use.
7. Commodity money-mediums of exchange such as cattle and gems that have values as a
commodity or a good, aside from their value as money.
8. representative money-money not valuable in itself for non-money uses which can be
exchanged for some valuable commodity such as gold or silver.
9. fiat money-money that has value because a government fiat, or order, has established it
as acceptable for payment of debts.
10. legal tender-money that must by law be accepted for payment of public and private
debts.
11. overdraft checking-checking account that allows a customer to write a check of more
money than exists in his or her account.
12. electronic funds transfer-system of putting onto computers all various banking
functions that in the past were handled on paper.
13. monetary standard-manner in which a nation assigns value to its money.
14. automated teller machines-units that allow consumers to do their banking without the
help of a teller.
15. checking account-account in which deposited money can be withdrawn at any time
by writing a check.
16. demand deposits-money deposited in a bank that cab be withdrawn at any time; now
called checkable deposits.
17. checkable deposits- money deposited in a bank that cab be withdrawn at any time;
formerly called demand deposits.
18. thrift institutions-mutual savings banks, savings and loan associations, and credit
unions that offer many of the same services as commercial banks.
19. debit card-credit device used to make cashless purchases of goods and services;
money is electronically withdrawn from the consumer's checkable account and
transferred directly to the store's bank account.
20. near moneys-assets, such as savings accounts, that can be turned into money or into a
means of payment relatively easily and without the risk of loss of value.
21. M1-narrowest definition of the money supply; consists of moneys that can be spent
immediately and against which checks can be written; includes all paper bills and coins
in circulation including currency, travelers check, and checkable deposits.
22. M2-broader definition of the money supply; includes all of M1, plus such near
moneys as money market mutual fund balances and Eurodollars; includes all paler bill
and coins in circulation.