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27 Cards in this Set
- Front
- Back
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General statement that describes the causes of changes in financial variables, such as money supply and interest rates and the effects of these changes, changes in variables in the real sector such as employment, production and prices |
Monetary Theory |
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One that can well and simply predict an actual event |
Good monetary theory |
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Amount of goods and services |
Value of Money |
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Theories of Money |
Quantity Theory of Money Income Theory Transactions Theory Cash-Balance Theory |
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Relationship between the quantity of money |
Quantity Theory |
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Used to finance transaction |
Money in Circulation |
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Order to Finance Transaction |
Velocity of Circulation |
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Relationship between income and money |
Income Theory |
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Value of income form |
National income |
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Expenditures of real capital goods |
Investment |
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Part of income not spent on consumptions |
Savings |
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Total expenditures |
Consumption |
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Changes in the consumption expenditures are affected by the ff: |
Changes in holding of moey Changes in the availability of credit Changes in perception of the consumers |
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2 options of consumers receive income |
To spend on consumption To save |
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Forces of supply and demand |
Transactions approach |
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Proponent of Transaction Theory |
Irvin Fischer |
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Version of the quantity theory |
Cash-balances approach |
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Financial variables by central monetary |
Monetary Policy |
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Tools of Monetary Theory |
Open Market Operations Discount policy Reserve requirements |
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Central bank's activity Tools used by BSP |
Open Market Operations |
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2 types of open market operations |
Dynamic open market operations Defensive open market operations |
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Interest rate charged to the borrowers |
Discount rate |
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Changes in Discount |
Discount Policy |
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Regulation making |
Reserve requirements |
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Goals of Monetary Policy |
High Employment Economic growth Stable prices Interest-rate stability Stability of financial markets Stability in foreign exchange markets |
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Process of increasing productive capacity |
Economic Growth |
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Desirable feature of a growing economy |
Stability of interest rates |
