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15 Cards in this Set

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Central Bank
the financial institution that manages the government's finances, controls the availability of money and credit in the economy and serves as the bank to commercial banks.
European Central Bank
The central authority, located in Frankfurt, Germany, which oversees monetary policy in the common currency area.
Federal Reserve System
The central bank responsible for monetary policy in the US.
Financial Institution
Firms, such as banks that provide access to the financial markets, both to saves who with to purchase financial instruments directly and to borrowes who want to issue them' also known as financial intermediaries.
Financial Instruments
THe written legal obligation of one party to transfer something valuable (usually money) to another party at some future date, under certain conditions.
Financial Markets
THe part of the financial system that allows people to buy and sell financial instruments quickly and cheaply.
Financial System
The system that allows people to engage in economic transactions. It is composed of five parts': money, financial instruments, financial markets, financial institutions and central banks.
Information
A collection of facts. THe basis for the third core principle of money and banking: Information is the basis for decisions.
Markets
A virtual or physical place where goods, services and financial instruments are purchased and sold. The basis for the fourth core prinsiple of money and banking: markets set prices and allocate resources.
Money
As asset that is generally accepted as payment for goods and services or repayment of debt, acts as a unit of account and serves as a store of value.
Risk
A measure of undertainty about the future payoff to an investment, measured over some time horison and relative to benchmark. The basis for the second core principle of money and banking: Risk requires compensation.
Stability
Steady and lacking in variation. The basis for the fifth core principle of money and banking: Stability improves welfare.
Time
A measureable period during which something can happen. The basis for the first core principle of money and banking: time has value.
Core Principles of Money and Banking
1.Time has value.
2. Risk Requires Compensation.
3. Information is the basis for decisions.
4.Markets set prices and allocate resources.
5. Stability improves welfare.
Parts of Financial System
1. Money
2. Financial Instruments
3. Financial Markets
4. Financial Institutions
5. Central Banks