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33 Cards in this Set

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  • Back
The direct exchange of goods and services for other goods and services
Barter
Items used as money that also have intrinsic value in some other use
Commodity Monies
The decrease in the value of money that occurs when its suplly is increased rapidly
Currency Debasement
Intrest rate that banks pay to the Fed to borrow from it
Discount Rate
The difference between a bank's actual reserves and its required reserves
Excess Reserve
It sets goals concerning the money supply & intrest rates and directs the operation of the Open Market Desk in New York
Federal Open Market Committee (FOMC)
The Central Bank of the United States
Federal Reserve System (the FED)
Items designated as money that are intrinsically worthless
Fiat, or token, money
Banks and other institutions that act as a link between those who have money to lend and those who want to borrow money
Financial Intermediaries
Money that a government has required to be accepted in settlement of debts
Legal Tender
One of the functions of the FED, it provides funds to troubled banks that cannot find any other sources of funds
Lender of Last Resort
The propert of money that makes it a good medium of exchange as well as a store of value: It is portable and readily accepted and thus easily exchanged for goods
Liquidity Propert of Money
Money that can be directly used for transactions
M1, or transactions money
M1 plus sacings accounts, money market accounts and other near monies
M2, or broad money
What sellers generally accept and buyers generally use to pay for goods and services
Medium exchange, or means of payment
The multiple by which deposits can increase for every dollar increase in reserves; equal to one divided by the required reserve ratio
Money Multipllier
The pressure that in the past the Fed exerted on member banks to discourage them from borrowing heavily from the Fed
Moral Suasion
Close substitutes for transactions money, such as savings accounts and money market accounts
Near Monies
The office in the New York Federal Reserve Bank from which government securities are bought and sold by the Fed.
Open Market Desk
The purchase and sale by the Fed of government securities in the open market; a tool used to expand or contract the amount of reserves in the system and thus the money supply
Open Market Operations
The multiple by which deposits can increase for every dollar increase in reserves; equal to one divided by the required reserve ratio
Money Multipllier
The pressure that in the past the Fed exerted on member banks to discourage them from borrowing heavily from the Fed
Moral Suasion
Close substitutes for transactions money, such as savings accounts and money market accounts
Near Monies
The office in the New York Federal Reserve Bank from which government securities are bought and sold by the Fed.
Open Market Desk
The purchase and sale by the Fed of government securities in the open market; a tool used to expand or contract the amount of reserves in the system and thus the money supply
Open Market Operations
The percentage of its total deposits that a bank must keep as reserves at the Federal Reserve
Required Reserve Ratio
The deposits that a bank has at the Federal Reserve bank plus its cash on hand
Reserves
Occurs when many of those who have claims on a bank (deposits) present them at the same time
Run on a Bank
An asset that can be used to transport purchasing power from one time period to another
Store of Value
A standard unit that provides a consistent way of quoting prices
Unit of account
Currency held outside banks + demand deposits + traveler's checks + other checkable deposits
M1
M1 + savings accounts + money market accounts + other near monies
M2
_____________1______________
Required Reserve Ration
Money Multiplier