National Monetary Supply

Vocabulary

bankers' acceptance security

debt contract originated by a business and insured by a bank

capital flight

rapid movement of assets and money out of a nation's economy because of adverse conditions

central bank

institution that manages a country's or state's money supply, interest rates, and currency

commercial paper security

short-term note that originates from a corporation

deposit money

deposit that is payable on demand to the account holder by the financial institution

economic globalization

increasing interdependence of the world's economies

federal fund

fund that the Federal Reserve temporarily lends to institutions that have inadequate cash

fiat money

note that a government establishes, and backs the value of, as a valid form of payment by law

full-bodied money

currency that has a face value equal to the value of the substance from which it is constructed

globalization

assimilation of cultures, economies, and technologies from across the globe

gross domestic product (GDP)

general gauge of the overall economic status of a country in terms of goods and services produced by that country

inflation

continual increase in the average price levels of goods and services

M1 money supply

portion of the money supply that has the highest degree of liquidity

M2 money supply

entirety of the M1 money supply, as well as savings accounts, money market securities, and money market mutual funds

medium of exchange

mechanism that enables financial transactions

money

commonly accepted form of compensation for goods and services

money market mutual fund

investment portfolio made up of short-term debt securities

money market security

debt security that matures within a short period of time. Typically the term is a year or less.

negotiable certificate of deposit

security issued by banks of $100,000 or more that matures within one year of issuance

representative full-bodied money

note with a face value that originated from a quantity of precious metal

repurchase agreement

sale of a security where the seller promises to purchase back the security from the buyer at an agreed-upon price and date

standard of value

concept that ensures an equal measure of worth for monetary units

store of value

ability of money to continue to represent the same level of worth over time

tariff

tax placed on the imports and exports exchanged between countries

Treasury bill

government security issued by the U.S. Treasury representing a short-term debt obligation, with a relatively low interest rate and maturity period within one year

velocity of money

rate at which money flows through the economy