Macro Exam 3

Front 1

Controlling the Money Supply

Back 1

Lowering the required reserve ratio, purchasing government securities on the open market, and lowering the discount rate.

Front 2

Supplying the Economy with Paper Money

Back 2

The Federal Reserve banks have notes on hand to meet the demand of the banks and the public.

Front 3

Providing Check-Clearing Services

Back 3

Provides check-clearing services when a person writes a check to another, and the two parties have two different commercial banking institutions, the Fed will act as the liaison between the two banks with the handling of transferring the funds.

Front 4

Holding Depository Institutional Reserves

Back 4

Banks are required to keep reserves against customer deposits either in their vaults or in reserve accounts at the Fed.

Front 5

Supervising Member Banks

Back 5

Without warning, the Fed can examine the books of member commercial banks to assess the nature of the loans the banks have made, monitor compliance with bank regulations, check the accuracy of bank records ...

Front 6

Serving as Governments Bank

Back 6

It's primary and only customer is the Federal Government of the United States

Front 7

Serving as Lender of Last Resort

Back 7

Serves as the lender of last resort for banks suffering cash management, or liquidity, problems.

Front 8

Handling Sale of US Treasury Securities

Back 8

U.S Treasury securities (bills, notes, and bonds) are sold to raise funds to pay the government's bills. The Federal Reserve District Banks receive the bids for these securities and process them in time for weekly auctions.

Front 9

Money

Back 9

Any good that is widely accepted for purposes of exchange and the repayment of debt.

Front 10

Barter

Back 10

The exchange of goods and services for other goods and serves without the use of money.

Front 11

Medium of Exchange

Back 11

Anything acceptable in exchange for goods and services. (Function of Money)

Front 12

Unit of Account

Back 12

A monetary unit of measure or currency used to value/cost goods. (Function of Money)

Front 13

Store of Value

Back 13

The ability of a good to hold its value over time. (Function of Money)

Front 14

Double Coincidence of Wants

Back 14

In a barter economy , a requirement which must be must before a trade can be made.

Front 15

M1

Back 15

Currently held outside of banks plus checkable checkable deposits plus traveler's checks.

Front 16

M2

Back 16

M1 plus savings, plus money market mutual funds.

Front 17

Currency

Back 17

Coins and paper money

Front 18

Federal Reserve Notes

Back 18

Paper money issued by the Fed

Front 19

Checkable Deposits

Back 19

Deposits on which are check can be written

Front 20

Saving Deposit

Back 20

Interest earning account at a bank

Front 21

Time Deposit

Back 21

An interest-earning deposit with a specified maturity date

Front 22

Fractional Reserve Banking

Back 22

Banking arrangement that allows banks to hold reserves equal to only a fraction of their deposit liabilities

Front 23

Federal Reserve System

Back 23

Central Bank of the US

Front 24

Reserves

Back 24

Any money that is in the bank that has not been invested

Front 25

Required Reserves Ratio

Back 25

A percentage of each dollar deposited must be held in reserve

Front 26

Required Reserves

Back 26

Minimum dollar amount or reserves that a bank must hold against its checkable deposits as mandated by the Fed.

Front 27

Excess Reserves

Back 27

Any reserved held beyond the required amount.

Front 28

Board of Directors

Back 28

Governing body of the Fed Reserve System

Front 29

Federal Open Merket Committiee (FOMC)

Back 29

Main policy making board of the Fed.

Front 30

US Tresury securities

Back 30

Bonds and bond like securities issued by the US Treasury when it borrows money.

Front 31

Open Market Purchase

Back 31

The buying of government securities by the Fed

Front 32

Open Market Sale

Back 32

The selling of government securities by the Fed

Front 33

Cash Leakage

Back 33

When funds arew held as currency instead of depositing them into a checking account.

Front 34

Federal Funds Market

Back 34

A market where banks lend reserves to one another, ususally in short periods

Front 35

Federal Fund Rate

Back 35

The interest rate banks charge one another to borrow reserves.

Front 36

Discount Rate

Back 36

The interest rate charged on a discount loan.

Front 37

Face Value

Back 37

Total amount borrowed

Front 38

Coupon Rate

Back 38

The intrest rate of the face value

Front 39

Maturity Date

Back 39

The day when the full face value gets paid

Front 40

Stock

Back 40

Claim on assets of a coorporation

Front 41

Arbitrage

Back 41

Buy low, sell high.

Front 42

Dividen

Back 42

After tax corporate profits distributed to stockholders on a per share basis.

Front 43

What are the type of bonds?

Back 43

Coorporate Bonds, Municipal bonds, treasury bonds

Front 44

Futures Contract Components

Back 44

Product, quantity,price, time

Front 45

Option

Back 45

The right but not the obligation to buy or sell shares of stocks at a specified price on or before a specified date.

Front 46

Call

Back 46

Right but not the obligation to buy

Front 47

Put

Back 47

Right but not the obligation to sell.