1. UNIT 4 REVIEW

2. Three functions of money

3. MEDIUM OF EXCHANGE
ANYTHING THAT IS USED TO DETERMINE VALUE DURING THE EXCHANGE OF GOODS AND SERVICES. EXAMPLE: I will give you an apple for your pen.

4. UNIT OF ACCOUNT
MONEY PROVIDES A MEANS FOR COMPARING THE VALUES OF GOODS AND SERVICES. EXAMPLE: Comparing the price of a pair of shoes at different stores.

5. STORE OF VALUE
MONEY KEEPS ITS VALUE IF YOU DECIDE TO HOLD ON TO IT INSTEAD OF SPENDING IT. EXAMPLE: Saving your allowance to buy an IPOD.

6. SIX CHACTERISTICS OF MONEY

7. DURABILITY
OBJECTS USED AS MONEY MUST WITHSTAND THE PHYSICAL WEAR AND TEAR WITH CONTINUED USE.

8. MONEY MUST BE ABLE TO EASILY BE TRANSFERRED TO ONE PERSON TO ANOTHER.
PORTABILITY
MONEY MUST BE ABLE TO EASILY BE TRANSFERRED TO ONE PERSON TO ANOTHER.

9. MONEY MUST BE EASILY MADE INTO SMALLER DEMONATIONS, UNITS OF VALUE.
DIVISIBILITY
MONEY MUST BE EASILY MADE INTO SMALLER DEMONATIONS, UNITS OF VALUE.

10. UNIFORMITY
ANY TWO UNITS OF MONEY MUST BE THE SAME – IN TERMS OF WHAT THEYWILL BUY

11. LIMITED SUPPLY
MONEY MUST KEEP THE RIGHT AMOUNT OF VALUE, THERE CANNOT BE TOO MUCH OR TOO LITTLE OF “IT”.

12. ACCEPTABILITY
PEOPLE MUST BE ABLE TO EXCHANGE OBJECTS THAT SERVE AS MONEY FOR GOODS AND SERVICES.

13. COINS AND PAPERBILLS USED AS MONEY.
CURRENCY
COINS AND PAPERBILLS USED AS MONEY.

14. SOURCES OF MONey’s VALUE

15. COMMODITY MONEY
SOMETHING THAT HAS VALUE IN AND OF ITSELF THAT CAN ALSO BE USED AS MONEY.

16. REPRESENTATIVE MONEY
OBJECTS THAT HAVE VALUE BECAUSE YOU CAN EXCHANGE THEM FOR SOMETHING ELSE OF VALUE.

17. MONEY THAT HAS VALUE BECAUSE THE GOVERNMENT SAYS IT’S VALUABLE.
FIAT MONEY
MONEY THAT HAS VALUE BECAUSE THE GOVERNMENT SAYS IT’S VALUABLE.

18. History of banking in the united states

19. FEDERALISTS V. ANTI-FEDERALISTS
Central Bank
Regional Bank
Local Bank
FEDERERALISTS WANTED A CENTRAL BANK TO CONTROL ALL THE OTHER BANKS IN THE U.S
ANTI-FEDERALISTS WANTED THE STATES TO CONTROL ALL OF THE BANKS WITHIN THEIR STATE

20. 1ST BANK OF THE UNITED STATES
PURPOSE OF THE BANK:
Hold money collected in taxes
Borrow money
Issue representative money
Keep an “eye” on the other banks in the U.S.

21. Free banking era AKA the Wildcat Era Contain many problems: Bank runs
Wildcat Banks
Fraud
Different types of currency

22. BANK RUNS
WIDESPREAD PANIC IN WHICH GREAT NUMBERS OF PEOPLE TRY TO REDEEM THEIR PAPERMONEY AT ONCE.

23. DURING THE CIVIL WAR THE SOUTH ISSUED CURRENCY BACKED BY COTTON.
CURRENCY IN THE SOUTH
DURING THE CIVIL WAR THE SOUTH ISSUED CURRENCY BACKED BY COTTON.

24. GOLD STANDARD
MONETARY SYSTEM IN WHICH PAPER MONEY IS EQUAL TO A CERTAIN AMOUNT OF GOLD.

25. Federal reserve system
THE NATION’S FIRST TRUE NATIONAL BANK.

26. FDIC
THE PURPOSE IS TO MAKE SURE THAT CUSTOMERS DO NOT LOSE MONEY IF THE BANK FAILS.

27. ALL THE MONEY AVAILABLE IN THE ECONOMY.
MONEY SUPPLY
ALL THE MONEY AVAILABLE IN THE ECONOMY.

28. CURRENCY, CHECKS, DEBIT CARDSM1
CURRENCY, CHECKS, DEBIT CARDS

29. M2
AKA NEAR MONEY
INCLUDES ALL M1 MONEY, PLUS MONEY THAT IS INVESTED OR SAVED

30. MOST COMMON TYPES OF BANK ACCOUNTS
CHECKING
SAVINGS

31. A LOAN THAT IS USED TO BUY REAL ESTATE.
MORTAGE
A LOAN THAT IS USED TO BUY REAL ESTATE.

32. INTEREST
PRICED PAID FOR THE USE OF MONEY THE LARGEST SOURCE OF INCOME FOR BANKS

33. THE AMOUNT BORROWED ON A LOAN.
PRINCIpal
THE AMOUNT BORROWED ON A LOAN.
LOAN

34. MUTUAL FUNDS
POOL THE SAVINGS OF MANY INDIVIDUALS AND INVEST THIS MONEY IN A VARIETY OF AREAS

35. RETURN
THE MONEY AN INVESTOR RECEIVES ABOVE AND BEYOND THE MONEY INITIALLY INVESTED.

36. PENSION FUNDS
THE INCOME THAT A RETIREE RECEIVES AFTER WORKING A CERTAIN AMOUNT OF YEARS.

37. CD
A VERY SAFE INVESTMENT BECAUSE IT IS GUARANTEED BY THE FEDERAL GOVERNMENT.

38. CERTIFICATES SOLD BY A COMPANY OR GOVERNMENT TO FINANCE PROJECTS.
BONDS
CERTIFICATES SOLD BY A COMPANY OR GOVERNMENT TO FINANCE PROJECTS.

39. SAVINGS BOND
A VERY SAFE INVESTMENT BECAUSE IT IS BACKED BY THE GOVERNMENT THE MONEY IS USED TO HELP THE FEDERAL GOVERNMENT PAY ITS BILLS.

40. CORPORATE BONDS
MONEY INVESTED IN A BUSINESS CAN BE A SAFE OR RISKY INVESTMENT DEPENDING ON THE BUSINESS.

41. ISSUED BY CITIES OR STATE GOVERNMENTS TO FINANCE PROJECTS.
MUNICIPAL BONDS
ISSUED BY CITIES OR STATE GOVERNMENTS TO FINANCE PROJECTS.

42. ISSUED BY HIGH RISK COMPANIES THESE ARE VERY RISKY INVESTMENTS.
JUNK BONDS
ISSUED BY HIGH RISK COMPANIES THESE ARE VERY RISKY INVESTMENTS.

43. MONEY THAT IS LENT FOR LONGER THAN ONE YEAR.
Capital market
MONEY THAT IS LENT FOR LONGER THAN ONE YEAR.

44. MONEY THAT IS LENT FOR LESS THAN ONE YEAR.
MONEY MARKET
MONEY THAT IS LENT FOR LESS THAN ONE YEAR.

45. PERCENT OF STOCK ISSUED. Shares

46. NEW YORK STOCK EXCHANGE
THE LARGEST AND MOST ESTABLISHED STOCK EXCHANGE IN THE UNITED STATES. Created in 1792 NYSE

47. NASDAQ
THE SECOND LARGEST STOCK EXCHANGE IN THE UNITED STATES. CREATED IN ALL EXCHANGES ARE COMPLETED OVER COMPUTER TERMINALS.
NASDAQ

48. NAME GIVEN WHEN THE STOCK MARKET RISES.
Bull market
NAME GIVEN WHEN THE STOCK MARKET RISES.

49. PEOPLE WHO BUY STOCK ON A MINUTE BY MINUTE BASIS TO MAKE A PROFIT.
DAY TRADING
PEOPLE WHO BUY STOCK ON A MINUTE BY MINUTE BASIS TO MAKE A PROFIT.

50. NAME GIVEN WHEN THE STOCK MARKET FALLS.
BEAR MARKET
NAME GIVEN WHEN THE STOCK MARKET FALLS.

51. BLACK TUESDAY
THE DAY WHEN A RECORD NUMBER OF SHARES WERE SOLD. SOME CONSIDERED THIS THE BEGINNING OF THE GREAT DEPRESSION.