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28 Cards in this Set
- Front
- Back
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The price of a bond is _ to the interest rate on the bond |
inversely related |
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in a _ economy, all goods serve as money |
barter |
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exchange costs exist in both barter and monetary economies, but these costs are _ in barter economies compared to monetary |
higher |
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Money is an asset that is used to purchase goods and services refers to the function of money called |
medium of exchange |
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what is an example of a liquid asset |
M1 |
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M1 includes |
currency in circulation |
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whats included in m2 |
savings deposits, demand deposits, travelers checks |
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if there was more checkable deposits and less currency in m1, the money supply will... |
increase |
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excess reserves are equal to |
tr minus rr |
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increased currency drain causes checkable deposits to |
decrease |
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quantitative easing |
the purchase of long-term bonds by the federal reserve |
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the fed uses what to control the money supply most frequently |
open market operations |
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required reserves are equal to: |
deposits * required reserve ratio |
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if banks hold more excess resevres, money supply will |
decrease |
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Money demand functions is _ sloping |
downward |
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open market operations are purchase and sale of |
govt bonds by the fed |
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money supply curve is |
vertical |
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interest rate that the fed charges banks is |
discount rate |
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if fed makes open market purchase, results in |
increase in tr, increase in money supply |
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decrease in real income, money demand curve will... |
shift inward |
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open market sale of bonds by fed causes |
money supply curve to shift inward |
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decrease in real income causes m1 to |
remain unchanged |
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decrease in price level will cause nominal rate of interest to |
decrease |
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expansionary money policy |
increase in money supply by the fed |
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we engage in fractional reserve banking bc |
required reserve ratio is less than 100% |
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no longer used by the fed to conduct monetary policy |
auction facility |
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largest liability on balance sheet? |
checking account, savings account deposits of customers |
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banks can continue to make loans until tr equals rr |
true |
