Anything that is regularly used in exchange

Medium of Exchange

 The property of money that exchanges are made through the use of money

 
Barter

Trading goods directly for goods

The problem in a system of barter that one person may not have what the other desires.

 Unit of Account

 The property of money that prices are quoted in terms of money

Store of Value

 The property of money that prices are quoted in terms of money

M1

The sum of currency in the hands of the public plus demand deposits plus other checkable deposits

M2

M1 plus other assets, including deposits in savings and loans and money market mutual funds

Liabilities

The sources of funds for a bank, including deposits

An account for a bank that shows the sources of its funds as well the uses of the funds

Assets

Net Worth

The difference between assets and liabilities

Reserves

The fraction of banks' deposits that banks are legally required to hold in their vaults or as deposits at the Fed

Excess Reserves

Any additional reserves that a bank holds above its required reserves

Reserve Ratio

The ratio of reserves to deposits 

Money Multiplier

Any initial deposit leads to a multiple expansion of deposits.  In the simplified case, increase in deposits = (initial deposit) x (1/ reserve ratio)

Open Market Purchases

The Fed's purchase of government bonds, which increases the money supply

Open Market Sales

The Fed's sale of of government bonds to the public, which decreases the money supply

Discount Rate

The interest rate at which banks can borrow from the Fed

Federal Funds Market

The market in which banks borrow and lend reserves to one another

Central Bank

An official bank that controls the supply of money in a country.

Federal Reserve Bank

One of 12 regional banks that are an official part of the Federal Reserve System

Board of Governors of the Federal Reserve

The seven person governing body of the Federal Reserve system in Washington D.C.

FOMC

The group that decides on monetary policy

Accelerator Theory

The theory of investment that says that current investment spending depends positively on the expected future growth of real GDP

Procyclical

A component of GDP is procyclical if it rises and falls with the overall level of GDP

Bond

A promise or IOU to pay money in the future in exchange for money now

Nominal Interest Rate

Interest rates quoted in financial markets

Real Rate of Interest

The nominal rate minus the inflation rate

Liquidity Demand for Money

The demand for money that represents the needs and desires of individuals or firms to make purchases on short term 

Speculative Demand for Money

The demand for money that reflects the fact that holding money over short periods is less risky than holding stocks or bonds

Monetary Policy

The range of actions taken by the Federal Reserve to influence the level of GDP or the rate of inflation

Exchange Rate

The rate at which one currency trades for another in the market

Comparitive Advantage

The ability of one person or nation to produce a good at an oppurtunity cost that is lower than the oppurtunity cost for another person or nation

Quota

A limit on the amount of a good that can be imported 

Tariff

A tax on an imported good