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53 Cards in this Set
- Front
- Back
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A short-term bond is _____ one year |
less than |
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A long term bond is _____ one year |
greater than |
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A short-term bond is ______ one year |
less than
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long-term bond is ______ one year
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greater than
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If the USD/EURO exchange rate changes from 1.4 to 1.28, it means that the U.S. dollar________________, and the euro ________________________.
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appreciates, depreciates
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Bundling of many mortgages loans that form a new security called the _______________.
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Mortgage-backed securities
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_______________: portfolio of many assets such as stocks and/or bonds to diversify risk.
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Mutual fund
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Four state-run pensions are ______________________________________.
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TRSL,LASERS,LSERS,LSPRS
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Major problems of state-run pensions in Louisiana include _________________________________________________________________________________________________________________.
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UAL (large amount of unfunded accrued liability), more generous pension than the state can afford, early retirement, higher tax rate than the social security system |
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Hedge funds have _________ private investors.
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No more than 99
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The maximum annuity contribution that can be made by an employee is _____________.
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24,000
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_______________markets deal with newly issued stocks or bonds.
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Primary
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_________________deal with existing stocks or bonds.
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Secondary markets
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The Federal Reserve Bank or System was created by the_____________________; it has _____________district banks
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1913 Federal Reserve Act, 12 districts
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FOMC (Federal Open Market Committee):______ members; the main policymaking body; meets _____ times per year.
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12,8 |
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Monetary policy: The Fed manages ______ and _______ to pursue macroeconomic policy goals such as:
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money supply, interest rate, low interest, high employment, high growth rate, and financial system stability
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________________________: the interest rate banks charge each other for short-term loans.
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Federal funds rate
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________(Securities Exchange Act of 1934): regulates financial markets
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SEC
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________(1934): insures bank deposits up to $250,000
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FDIC |
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________: gap between the actual market price and the fundamental value or an unsustainable increase in the house price |
Bubble |
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Traditional mortgages required at least_______ down payment of a mortgage loan, ___________. and ____________________.
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20%, stable employment, and reasonable income
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________(also called non-traditional mortgage; pay very low interest rates in first few years and pay very high interest rate in later years)
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Adjustable Rate Mortgage (ARM)
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The housing bubble occurred during ________.
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2000-2005
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Housing prices began to decline in ________
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2006
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Major events during the 2008-2009 financial crisis include the bailout, acquisition or bankruptcy of :
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Bear Stearns, Merrill Lynch, AIG, Lehman Brothers
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Major problems of a barter system include ___________ and__________.
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A good may have many prices relative to another good, and lack of standardization |
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In a barter system, a transaction would occur only with ______.
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Double coincidence of wants
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Fiat money has no ______whereas commodity money has ______.
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Intristic Value, Intristic Value
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Four major functions of money include ….
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Medium of exchange, unit of payment, store of value, and standard of deferred payment
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Examples of e-money include ______ and _____
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Paypal and Payphrase
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Checking account deposits belong to ________
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M1
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Small time deposits (<$100,000) belong to ______.
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M2
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Savings accounts belong to ______.
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M2
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MMDAs belong to ______.
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M2
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Non-institutional (retail) MMMFs belong to ________.
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M2 |
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______________: number of times that each dollar changes hands or is spent on a good or service included in the GDP.)
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Velocity
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If the money supply grows far more rapidly than real output of goods and services, _____________ would occur.
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Hyperinflation
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________________: central banks buy the government bond directly and provide the needed funds by printing the money.
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monetization
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Studies show that more independent central banks lead to _______ inflation rate.
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Lower
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Interest rates are paid in order to compensate for _____, _____, _____ for giving up the use or liquidity of money. |
Inflation, default risk, opportunity costs |
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If interest rates on newly issued bonds rise, the prices of existing bonds will _________.
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decline
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If interest rates on newly issued bonds decline, the pries of existing bonds will __________.
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rise
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Market risk is ____ to all assets whereas idiosyncratic risk is related to a ____ asset.
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Common, particular
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If wealth declines, D will shift ___________.
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left
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If expected rate of return declines, D will shift _______.
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left
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If business taxes rise, S will shift ____________.
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left
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If the government borrowing (deficit) rises, S will shift _________.
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right
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If wealth declines, D will shift ___________.
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left
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If expected rate of return declines, D will shift _______.
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left
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If the Fisher effect holds and if the expected inflation rate changes by 2%, the NIR will change by _____.
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2%
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Demand for L.F. comes from _______.
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borrowers
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Supply of L.F. comes from _________.
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Lenders/savers
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Countries with surplus L.F. may lend it to countries with shortage of L.F. The interest rate in the lending country will ____ whereas the interest rate in the borrowing country will ______.
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Rise, decline |
