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28 Cards in this Set
- Front
- Back
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What are the components of money? |
Currency/Coin, money in checking accounts |
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What is direct finance? |
Turn savings from HH to business, no intermideary |
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What is the difference between M1 and M2? |
M1 includes currency/coin and checking accounts M2 is M1 plus savings accounts |
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What countries have market dominated financial systems? |
US and Great Britain |
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What is a surplus budget unit? |
An individual whose income exceeds expenditures and is a net lender |
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What are characteristics of countries with more fully developed financial systems? |
Faster growth, higher standard of living |
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What is the basic commodity traded in financial markets? |
Credit |
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Gurley Shaw Equation |
Revenue- Expenditures= change in Financial assets - changes in debt |
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What are the markets in the circular flow diagram? |
Product, Financial and Factor |
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What is a financial asset? |
A claim against the income of somebody usually represented by a certificate |
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What is the result of household savings that are not returned to the economy? |
Lower rate of growth |
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What financial service area provides loanable funds? |
Households |
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What is the liquidity function? |
Capability of an asset to be sold quickly with little risk of loss and has a steady price |
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Which sector of the economy is usually a surplus budget sector? |
Household sector |
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What is internal financing? |
Use of saving by an economic unit rather than debt to support financial assets |
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Which sector of the economy is usually a deficit budget sector? |
Business/government |
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What is indirect finance? |
Use a 3rd Part that offers no risk and liquidity |
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What are secondary securities? |
Financial claims issued by a financial intermediary to raise loanable funds |
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What is medium of exchange? |
Something that buyers can exchange for goods/services |
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What is the most important financial asset in any economy? |
Money |
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What is the secondary market? |
Previously issued securities, used to provide liquidity to investors |
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What effect does the financial system have on the standard of living? |
Increases standard of living if it increases the amount of credit available |
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What is a spot market? |
Assets are traded for immediate delivery |
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What's the relationship between cost of credit and number of jobs? |
When number of jobs increases, cost of credit decreases |
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What is the primary market? |
For new securities, used for raising capital to support new investments |
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What's the role of markets in a market orientated economy? |
To allocate scarce resources |
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What is a capital market? |
Long term investments |
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What is a money market? |
Short term loans |
