Comprehensive Guide to Financial System: Money, Markets, Institutions, and Regulation, Quizzes of Economics

Download Comprehensive Guide to Financial System: Money, Markets, Institutions, and Regulation and more Quizzes Economics in PDF only on Docsity! TERM 1 Financial system DEFINITION 1 The system that allows people to engage in economic transactions. It is composed of six parts: money, financial instruments, financial markets, financial institutions, regulatory agencies, and central banks. TERM 2 Money DEFINITION 2 An asset that is generally accepted as payment for goods and services or repayment of debt, acts as a unit of account, and serves as a store of value. TERM 3 Financial instruments DEFINITION 3 The written legal obligation of one party to transfer something of value (usually money) to another party at some future date, under certain conditions. TERM 4 Financial markets DEFINITION 4 The part of the financial system that allows people to buy and sell financial instruments quickly and cheaply. TERM 5 Financial institutions DEFINITION 5 Firms, such as banks and insurance companies, that provide access to the financial markets, both to savers who wish to purchase financial instruments directly and to borrowers who want to issue them; also known as financial intermediaries. TERM 6 Regulatory agencies DEFINITION 6 Entities responsible for making sure that the elements of the financial system operate in a safe and reliable manner. TERM 7 Central banks DEFINITION 7 The financial institution that manages the governments finances, controls the availability of money and credit in the economy, and serves as the bank to commercial banks. TERM 8 Federal Reserve System DEFINITION 8 The central bank responsible for monetary policy in the United States. TERM 9 Regulation DEFINITION 9 A set of specific rules imposed by the government that the managers of financial institutions and participants in financial markets must follow. TERM 10 Supervision DEFINITION 10 General government oversight of financial institutions.