(18) Understanding Money, Banking, and Credit

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  1. Barter System
    A system of exchange in which goods or services are traded directly for others goods or services
  2. Medium of Exchange
    Anything a society uses to purchase products, services, or resources
  3. Store of Value
    A means of retaining and accumulating wealth
  4. Demand Deposit
    An amount on deposit in a checking account
  5. Time Deposit
    An amount on deposit in an interest-bearing savings account or certificate of deposit
  6. Federal Reserve System
    The central bank of the United States responsible for regulating the banking industry
  7. Commercial Paper
    A short-term promissory note issued by a large corporation
  8. Reserve Requirement
    The percentage of its deposit a bank must retain, either in its own vault or on deposit with its Federal Reverse district bank
  9. Discount Rate
    The interest rate the Federal Reverse System charges for loans to member banks
  10. Open-Market Operations
    The buying and selling of U.S. government securities by the Federal Reserve System for the purpose of controlling the supply of money
  11. Federal Funds Rate
    The interest rate at which a bank lends immediately available funds on deposit at the Fed to another bank overnight to meet the borrowing bank's reserve requirements
  12. Commercial Bank
    A profit-making organization that accepts deposits, make loans, and provides related services to its customers
  13. National Bank
    A commercial bank chartered by the U.S. Comptroller of the Currency
  14. State Bank
    A commercial bank chartered by the banking authorities in the state in which it operates
  15. Savings and Loan association (S&L)
    A financial institution that offers checking and savings accounts and CDs and that invests most of its assets in home mortgage loans and other consumer loans
  16. Credit Union
    A financial institution that accepts deposits from, and lends money to, only the people who are its members
  17. Now Account
    An interest-paying checking account; (negotiable order of withdrawal)
  18. Certificate Deposit (CD)
    A document stating that the bank will pay the depositor a guaranteed interest rate on money left on deposit for specified period of time
  19. Line of Credit
    A loan that is approved before the money is actually needed
  20. Revolving Credit Agreement
    A guaranteed line of credit
  21. Collateral
    Real estate or property pledged as security for a loan
  22. Electronic Funds Transfer (EFT) System
    A means of performing financial transactions through a computer terminal or telephone hookup
  23. Letter of Credit
    A legal document issued by a bank or other financial institution guaranteeing to pay a seller a stated amount for specified period of time
  24. Banker's Acceptance
    A written order for a bank to pay a third party a stated amount of money on specific date
  25. Credit
    purchasing power that is exchanged for a promise to repay borrowed money, with or without interest at a later date
Card Set
(18) Understanding Money, Banking, and Credit
Chp 18
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