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19 Cards in this Set
- Front
- Back
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Money |
Any asset that can easily be used to purchase good and services |
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Liquidity |
Describes an asset that can be quickly converted into cash with relatively little lots of value |
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Financial intermediary |
An institution that transforms the funds it gathers from many individuals into financial assets, such as a mutual fund, pension, life insurance, or bank |
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Monetary base |
the sum of currency in circulation and bank reserves |
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Central bank |
An institution that oversees and regulated the banking system and controls the monetary base |
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Leverage |
The degree to which a financial institution is financing it's investments with borrowed funds |
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Balance sheet effects |
The reduction in a firm's net worth from falling asset prices |
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Subprime lending |
Lending to homebuyers who don't meet the usual criteria for borrowing |
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Securitization |
The pooling of loans and mortgages made by a financial institution and the same of shares in such a pool to other investors |
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Difference between commodity money & fiat money |
Commodity: a medium of exchange that is good that had intrinsic value in other uses i.e. gold or silver Fiat: a medium of exchange whose value derives entirely from its official status as a means of payment |
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Function of money |
Medium of exchange Site of value Unit of account |
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Mutual fund |
Creates a sick portfolio and resells shares of this portfolio to individual investors |
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Pension funds |
Type of mutual fund that holds assets in order to provide retirement income to its members |
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Life insurance |
Sells policies that guarantee payment to a policyholder's beneficiary when the policyholder dues |
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Banks |
Provides liquid assets in form of bank deposits to lenders and uses those funds to finance the illiquid investment spending needs of borrowers |
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Monetary policy |
Changes in quantity of money in circulation designed to alter interest rates and affects the level of overall spending |
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Money market equilibrium |
Where MS and MD cross on the money supply and demand curve |
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Policy lags |
Recognition Legislative Implementation & impact |
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Bank regulations to prevent bank runs |
Deposit insurance Capital requirements Reserve requirements Discount window |
