Economic Unit 4 Vocabulary

Central bank

• An institution that manages a state's currency, money supply, and interest rates.

• A private bank that offers loans to individuals.

• A government agency that regulates stock markets.

• A financial institution that provides insurance services.

Representative money

• Money that represents a claim on a commodity, such as a gold certificate.

• Currency that has intrinsic value.

• A type of digital currency used in online transactions.

• A form of barter system involving goods and services.

Token coin

• A coin that has a face value greater than its intrinsic metal value.

• A coin that is used only in specific locations or events.

• A coin that is made of rare metals and is highly collectible.

• A coin that has no legal tender status.

M-2

• A category of the money supply that includes M-1 plus savings accounts, time deposits, and other near money.

• A measure of the total value of all physical currency in circulation.

• A type of investment that includes stocks and bonds.

• A classification of money that only includes cash and coins.

Board of Governors

• The main governing body of the Federal Reserve System, responsible for overseeing the Federal Reserve Banks and helping implement monetary policy.

• A committee that sets interest rates for commercial banks.

• An advisory board that provides recommendations to the President on economic issues.

• A regulatory agency that monitors the stock market.

M-1

• A category of the money supply that includes all physical money, such as coins and currency, as well as demand deposits and other liquid assets.

• A measure of the total value of all goods and services produced in a country.

• A type of investment that involves purchasing stocks and bonds.

• A financial term that refers to the total amount of money in circulation.

Fiat money

• Money that has intrinsic value based on its physical properties.

• Money that has value because a government maintains its value, or because parties engaging in exchange agree on its value.

• Money that is backed by a physical commodity like gold or silver.

• Money that is used only in specific regions or countries.

Monetary policy

• The process by which a central bank manages a country's money supply to achieve specific goals, such as controlling inflation, maintaining employment, and ensuring economic stability.

• A method used by governments to increase taxes and reduce public spending.

• A strategy to control the stock market and influence corporate profits.

• An approach to regulate international trade and tariffs.

Full-bodied coin

• A coin that contains the same value in metal as its face value.

• A coin that is larger than standard coins.

• A coin that is made of multiple metals.

• A coin that is only used for commemorative purposes.

Fractional reserve banking

• A banking system where all deposits are available for withdrawal at any time.

• A banking system in which only a fraction of bank deposits are backed by actual cash on hand and available for withdrawal.

• A banking system that requires banks to keep 100% of deposits in reserve.

• A banking system that allows banks to lend out all deposits without any reserve requirements.