Federal Reserve System Vocab

Front 1

Monetarism

Back 1

Theory/practice of controlling supply of $ as main method of stabilizing econony

Front 2

Easy Money Policy

Back 2

Increases $ supply by lowering interest rates

Front 3

Tight money policy

Back 3

Restrict credit and raise interest rates

Front 4

Inside lag

Back 4

Amt. of time it takes for a govt /central bank to respond to a shock in the economy

Front 5

Outside lag

Back 5

time it takes for a govt/central bank's actions... to have noticeable effect on econony

Front 6

Money creation

Back 6

Process where $ supply of a country/monetary region is increased

Hint 6

Eurozone

Front 7

Required reserve ration

Back 7

Sets minimum fraction of customer deposits that each commercial bank must hold as reserves

Front 8

Money Multiplier Formula

Back 8

Amt. of $ that banks generate with each $ of reserves

Front 9

Excess reserves

Back 9

Bank reserves in excess of requirement set by central bank

Front 10

Prime rate

Back 10

Lowest interest rate at which money may be borrowed commercially

Front 11

Money

Back 11

Current medium of exchange in form of coins and banknotes (collectively)

Front 12

Meduim of exchange

Back 12

Intermediary used in trade to avoid inconveniences of pure barter system

Front 13

Barter

Back 13

Action/system of exchanging goods/services w/o using $

Front 14

Unit of account

Back 14

Nominal monetary unit of currency used to value/ cost goods, services, assets, liabilities, income, expenses

Hint 14

acronym: used to value S.E.L.I.A

Front 15

Store of value

Back 15

Function of an asset that can be saved, retrieved and exchanged at later time and be useful when retrieved

Front 16

Currency

Back 16

System of money in general use in particular country

Hint 16

Dollar; USA

Front 17

Commodity Money

Back 17

$'s value comes from a commodity of which it is made

Front 18

Representative money

Back 18

Token that has no intrinsic value, but can be exchanged for a commodity

Hint 18

Ex: gold, silver, copper, and even tobacco

Front 19

Specie

Back 19

Money in the form of coins rather than notes

Front 20

Fiat Money

Back 20

In convertible paper money made legal tender by govt decree

Front 21

Bank

Back 21

Financial institution licensed as a receiver of deposits

Front 22

National Bank

Back 22

Commercial bank chartered under federal govt

Front 23

Bank run

Back 23

When many bank customers withdraw their deposits simultaneously due to bank concerns

Front 24

Credit card

Back 24

plastic card, issued by bank... allows holder to purchase things on credit

Front 25

Interest

Back 25

Money paid regularly for use of money lent

Front 26

Principle

Back 26

Amount borrowed

Front 27

Debit card

Back 27

Card issued by bank allowing holder to transfer money electronically to another bank account when making purchase

Front 28

Creditor

Back 28

A person/company to whom money is owed

Front 29

Fiscal policy

Back 29

Changes in tax revenues of the federal govt, undertaken to promote full employment, price stability, and reasonable rates of economic growth

Front 30

Board of governors

Back 30

7 - member committee that controls FRS

Hint 30

Also called Federal Reserve board, or the Fed

Front 31

Federal open market committee

Back 31

12 member group determines purchase/ sale policies of Federal Reserve Banks

Front 32

Federal Reserve Banks

Back 32

12 banks charted by US GOVT to control the money supply

Front 33

Greenback

Back 33

A dollar bill

Front 34

Money supply

Back 34

Total money in circulation or in existence In a country

Front 35

Liquidity

Back 35

Availability of liquid assets to a market or company

Front 36

Demand deposit

Back 36

Deposit of money that can be withdrawn without prior notice

Front 37

Gold standard

Back 37

GOLD

Front 38

Central bank

Back 38

National Bank that provides financial services for its country's govt, implement monetary policy, and issue currency

Front 39

Member bank

Back 39

Commercial banks that are members of and hold stock in FRS

Front 40

Foreclosure

Back 40

Process of taking possession of a mortgaged property because of mortgager's failure to pay mortgage payments

Front 41

Default

Back 41

Failure to fulfill and obligation

Front 42

$ Markey Mutual Fund

Back 42

Open-ended mutual fund that invests in short-term debt securities such as US treasury bills and commercial paper

Front 43

Fractional Reserve Banking

Back 43

bank accepts deposits, makes loans/ investments, and holds reserves that are fraction of its deposit liabilities

Front 44

Mortgage

Back 44

Charging of personal property by a debtor to creditor as security for debt, on condition that it shall be returned on payment of debt within certain period

Front 45

Reserves

Back 45

Currency deposits which are not lent out to banks clients