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16 Cards in this Set

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ASSET
A FINANCIAL CLAIM OR PIECE OF PROPERTY THAT IS A STORE OF VALUE
BANKS
FINANCIAL INSTITUTIONS THAT ACCEPT DEPOSITS AND MAKE LOANS:
COMMERCIAL BANKS
SAVINGS AND LOANS
CREDIT UNIONS
BOND
A DEBT SECURITY THAT PROMISES TO MAKE PAYMENTS PERIODICALLY FOR A SPECIFIED PERIOD OF TIME.
CENTRAL BANK
THE GOVERNMENT AGENCY THAT OVERSEES THE BANKING SYSTEM AND IS RESPONSIBLE FOR THE AMOUNT OF MONEY AND CREDIT SUPPLIED IN THE ECONOMY; IN THE THE UNITED STATES IT'S THAT FEDERAL RESERVE SYSTEM.
FEDERAL RESERVE SYSTEM (THE FED)
THE CENTRAL BANKING AUTHORITY RESPONSIBLE FOR MONETARY POLICY IN THE UNITED STATES.
FINANCIAL INTERMEDIARIES
INSTITUTIONS (SUCH AS BANKS, INSURANCE COMPANIES, MUTUAL FUNDS, PENSION FUNDS, AND FINANCE COMPANIES) THAT BORROW FUNDS FROM PEOPLE WHO HAVE SAVED AND THEN MAKE LOANS TO OTHERS.
FINANCIAL MARKETS
MARKETS IN WHICH FUNDS ARE TRANSFERRED FROM PEOPLE WHO HAVE A SURPLUS OF AVAILABLE FUNDS TO PEOPLE WHO HAVE A SHORTAGE OF AVAILABLE FUNDS.
FOREIGN EXCHANGE MARKET
THE MARKET IN WHICH EXCHANGE RATES ARE DETERMINED.
INTEREST RATE
THE COST OF BORROWING OR THE PRICE PAID FOR THE RENTAL OF FUNDS (USUALLY EXPRESSED AS A PERCENTAGE PER YEAR).
MONETARY POLICY
THE MANAGEMENT OF THE MONEY SUPPLY AND INTEREST RATES.
SECURITY
ALSO CALLED A FINANCIAL INSTRUMENT. IT IS A CLAIM ON THE BORROWERS FUTURE INCOME THAT IS SOLD BY THE BORROWER TO THE LENDER.
STOCK
A SECURITY THAT IS A CLAIM ON THE EARNINGS AND ASSETS OF A CORPORATION
DIRECT FINANCE
ONE TO ONE DEAL. A TWO PARTY CONTRACT. NO FACILITATOR.
SEMI-DIRECT FINANCE
A TWO PARTY CONTRACT WITH THE HELP OF A THIRD PARTY, THE FACILITATOR, LIKE A BROKER. A CORPORATE BOND IS AN EXAMPLE OF THIS
INDIRECT FINANCE
AT LEAST 3 PARTIES ARE INVOLVED AND THERE ARE TWO OR MORE CONTRACTS. AN EXAMPLE WOULD BE A SAVER DEPOSITS FUNDS INTO THE BANK ... 2 WEEKS FROM NOW THE BANK LOANS MONEY TO SOMEONE ... THIS IS INDIRECT FINANCE.
WHAT ARE THE THREE METHODS OF MONETARY POLICY?
1. CHANGES IN THE RESERVE REQUIREMENT.
2. CHANGES IN THE RATE AT THE DISCOUNT
LENDING WINDOW (THE FED)
3. OPEN MARKET OPERATIONS (MOST
IMPORTANT)