Test 4
Chapter 11
• Monetary policy: the use of tools controlled by the government, such as banking regulations and the
issuance of currency, to affect the levels of money, supply, interest rates, and credit.
• Barter: exchange of goods, services, or assets directly for other goods, services, or assets, without the
use of money.
• Deflation: when the aggregate price level falls.
• Liquidity: the ease of use of an asset as a medium of exchange
• Commodity money: a good used as money that is also valuable itself
• Intrinsic value: value related to the tangible or physical properties of the object.
• Fiat money: a medium of exchange that is used as money because a government says it has value, and
that is accepted by the people using it.
• Exchange value: value that corresponds to the value of goods or services for which the item can be
exchanged.
• M1: a measure of the money supply that includes currency, checkable deposits and traveler checks
• M2: a measure of the money supply that includes all of the M1, plus savings deposits, small certificates
of deposit and retail money market funds
• Financial intermediary: an institution such as a bank, savings and loan association, or life insurance
company that accepts funds from savers and makes loans to borrowers
• Economic liability: anything that one economic actor owes to another
