Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
30 Cards in this Set
- Front
- Back
|
credit |
available savings that are lent to borrowers to spend |
|
|
demand deposit |
a checking account that requires the bank to pay the amount of the check immediately upon request |
|
|
money (deposit expansion) multiplier |
the reciprocal of the reserve requirement |
|
|
excess reserves |
the amount of money banks can lend out |
|
|
FDIC |
insures bank deposits up to $250,000 |
|
|
fractional reserve banking system |
when banks keep less than 100% of their deposits available for withdrawal |
|
|
liquid asset |
can be easily exchanged for goods and services |
|
|
M1 Money supply |
consists of cash in circulation and checking account deposits |
|
|
M2 Money supply |
includes cash in circulation, checking, saving, certificates of deposit, and money market mutual funds |
|
|
required reserves |
percentage of checking deposits that must be kept on hand or deposited at the Federal Reserve |
|
|
discount rate |
the interest rate charged to banks on loans obtained from the Federal Reserve |
|
|
equation of exchange |
relates the quantity of money to nominal GDP |
|
|
federal funds rate |
the interest rate charged to banks on loans from other banks |
|
|
FOMC |
the official policy making body of the Federal Reserve |
|
|
foreign exchange market intervention |
the buying and selling of currencies by a central bank in order to influence the exchange rate |
|
|
legal reserves |
cash in a bank's vault plus the amount deposited at the Federal Reserve |
|
|
open market operations |
buying and selling of securities by the Federal Reserve in order to influence the money supply and the fed funds rate |
|
|
precautionary demand for money |
used to cover unplanned transactions or emergencies |
|
|
quantity theory of money |
assuming constant velocity of money, changes in the quantity of money changes nominal GDP |
|
|
transaction demand for money |
created by the desire to buy goods and services |
|
|
velocity of money |
average number of times each dollar is spent on final goods and services in a year |
|
|
certificates of deposit |
savings accounts that are deposited for a specific period of time |
|
|
thrift institutions |
credit unions, savings and loans, and mutual savings banks |
|
|
financial intermediaries |
bring together savers and borrowers |
|
|
Board of Governors |
the seven members who set and direct district banking policies and determine the course of monetary policy |
|
|
Federal Reserve Notes |
paper money issued by the Federal Reserve Banks |
|
|
fiat money |
anything that is money because of a government decree |
|
|
medium of exchange |
the function of money that allows the exchange of goods and services without the use of barter |
|
|
store of value |
function of money that allows an asset to set aside for future use |
|
|
unit of account |
the function of money that allows the value of goods and services to be compared |
