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20 Cards in this Set
- Front
- Back
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Liquid
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an asset that is easily converted into cash
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Currency in circulation-
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actual cash in the hands of the public
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Money supply
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the total value of financial assets in the economy that are considered money
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Medium of exchange
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an asset individuals acquire for the purpose of trading rather than consuming ex money
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Store of value
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the ability to hold purchasing power over time
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Unit of account
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a measure of the value of a good
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Fiat money
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money not tagged to the gold standard, whose value is entirely derived from the general agreement that it means something
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Bank
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a financial intermediary that provides liquid assets in the form of bank deposit to lenders and uses those funds to finance the illiquid investment of borrowers.
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Bank reserves
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the currency a bank holds in their vault as well as their deposits at the federal reserve
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Liability
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the requirement of a bank to be able to give customers their deposit.
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Reserve ratio
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the fraction of deposits that banks must hold in their vaults
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Deposit insurance
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guarantees that a banks depositors will be paid even if the bank can't come up with the funds up to a maximum amount per account.
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Reserve requirements
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fed requires %10 of deposits be in a banks vault
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Excess reserves
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those reserves that are left over from what is taken away by the reserve ratio
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Federal reserve
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the bank of banks
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Federal funds market
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allows banks that fall below the reserve requirement to borrow from banks with excess reserves
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Federal funds rate
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the interest rate as determined within the federal funds market
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Discount rate
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the rate of interest the Fed charges on loans to banks
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Open market operation
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the purchase/ sale of the government debt by the Fed
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Target federal funds rate
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the rate which the Fed will achieve by fucking with the amount of funds in circulation
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