Money & Banking Unit Terms

Money

anything that people commonly accept in exchange for goods and services.

Medium of exchange

any item that sellers accept as payment for goods and services.

Standard of value

money provides people with a way to measure the relative value of goods and services

Store of value

money can be saved, or stored for later use.

Durability

money's ability to be used over and over again.

Portability

money's ability to be carried from one place to another and transferred from one person to another.

Divisibility

money's ability to be divided into smaller units.

Stability in value

money's ability to maintain purchasing power.

Acceptability

money's ability to be widely accepted for goods and services.

Commodity money

an item that has a value of its own and that also is used as money.

Representative money

an item that has value because it can be exchanged for something else of value.

Fiat money

an item made into legal money by a government.

Currency

a system of money in general use in a country.

Demand deposit

Checking accounts held at a financial institution.

Money order

a check backed by the issuer for a pre-specified amount of money, and usually have a max limit of $1,000.

Cashiers check

a check written by a financial institution on its own money, and does not have a maximum limit.

Barter

exchange of goods or services for other goods or services without using money.

Gold standard

a government money system in which paper money and coins carry value in a specific amount of gold.

Federal deposit insurance corporation (FDIC)

a corporation insuring deposits in the United States against bank failures.

Liquidity

how quickly or easily assets can be made available into money.

Principle

the amount borrowed or loaned out to an individual or business by a creditor.

Interest

the amount owed on top of the principle for taking out a loan.

Debit card

a card issued by a bank allowing the holder to transfer money electronically to another bank account when making a purchase.

Credit card

card issued by a bank, business, etc., allowing the holder to purchase goods or services on a temporary loan.

Default

the failure to make payments on a loan.

Mortgage

a transfer of rights to a piece of property in return for a loan of money and that is canceled when the loan is paid.