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13 Cards in this Set
- Front
- Back
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Fiat Money
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Money that has neither intrinsic value
Example: paper currency |
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Liquid Asset
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An asset that can be easily and quickly converted to purchasing power.
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M1
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Measuring the Money Supply:
The sum of : 1. currency in circulation 2.checkable deposits 3. traveler's checks |
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M2
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Measuring the Money Supply:
Equal to M1 plus: 1.savings deposits 2.time deposits 3.money market mutual fund |
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Federal Reserve System
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responsible for regulating money supply to promote full employment and price stability
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3 Functions of Money
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Storing value for future
Medium of Exhange Accounting Unit |
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When supply of money is limited, it becomes _________
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more valuable. demand rises
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When supply of money is greater than demand it ____________
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less valuable
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3 tools Feds use to control money supply
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Reserve Requirements
Discount Interest Rates Buy/Sell bonds |
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If the Feds Buy bonds, the system will_______
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expand it money supply
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If the Fed sells bonds, the system will______
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reduce its money supply
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To expand money supply, the feds will______
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Buy Bonds
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To reduce the money supply, the Feds will________
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Sell bonds
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