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18 Cards in this Set
- Front
- Back
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functions of money
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unit of account, storage of value, means of exchange
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money supply
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all the money avilable in the US economy
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M1
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money that people can gain access to easily and immediatley to to pay for goods and services. most liquid money: cash, checks, debit card, traveller's checks
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multiplier effect
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explains how money is created. loans create money
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demand deposit
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the money in checking accounts, M1 money
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liquidity
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the ability to be used as, or directly converted to, cash
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federal reserve system created to...
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encourage business expanision, restore confindence in banking
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Jobs of the FED
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monetary policy, clear checks, regulate banks, issue currency, bank for federal government, lender of last resort, confidence in our currency and banking system
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Alan Greenspan
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Chairman of the FED
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monetary policy
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how the FED manipulates the money supply in order to regulate the economy
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discount rate
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rate the Federal Reserve charges for loans to commercial banks
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open market operations
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the buying and selling of government securities to alter the supply of money
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reserve requirement
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percent of money that banks are required to keep by the FED
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interest rates
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the percentage of price paid for the use of borrowed money or money earned by deposited funds
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fiscal policy
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the use of government spending and revenue collection to influence the economy
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expanionist policy
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policies that encourage economic growth like spending
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contractionary policy
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fiscal policies, like lower spending and higher taxes, that reduce economic growth
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Laffer Curve
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1. lowering taxes increases output because people have incentive to work more and because it puts more $ in the economy
2.government can lower taxes and may actually move towards a surplus by collecting more in revenue (sideways parabola) |
