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28 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Function of Money
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Medium of Exchange, Store of Value, Unit of Account, Regulate the economy
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Properties of Money
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Durable, transportable, full bodied money (face value= instrict value), representative money (the value is on the face of the bill)
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Forms of Money
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decided by the public
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Liquid
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assets that can be converted to cash
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Fiancial market
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where securites are bought and sold
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Financial instuttion
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engage in financial actions
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Financial intermediatries
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middle man who uses bank
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M1-
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currency in public circulation + adjusted demand deposit+ trav checks
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Ajusted demand deposit
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gross demand dep- interbank deposits- items in proces of collectino- fed reseverve float-treasury deposis-deposit of foreign banks and official inst.
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GDD-ID-IPC-FRF-TR-DFO
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fed float
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loan given to bank (interest free) in process of clearing a check (if clearing passes more then 2 days)
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M2-
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reservoir of purchasing power
m1+ savings deposit+small cds+ mm deposit accoint+ retail market mutual fund |
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M3-
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m2+ large cds+ institutualian mmf's+ pepo's + eurodollars
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Pepo
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sell security w/ the stipulation that you'll buy back at a set time and price
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euro dollar
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not euro currrency, USD abroad
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What limits how much money a bank can create?
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Reserve Requirement
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Discount rate
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rate @ which fed lends to a bank
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Money demand
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how much money people can owe (owe more, less money in circulation)
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Velocity of money
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how many times money turns over in a year
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Income velocity
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GDP (total income)/total value of the money supply
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Transaction Velocity (and con about it)
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total volume transactions/total volume of Money supply
** hard to measure b/c of undocumented transaction |
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Commercial Paper
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issue of coporation (shor tterm)
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Full employment
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when everyone is willinging/able to work, work
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Hyper inflation
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money price increas out of proportion
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How does fed regulate the economy
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incr ms to lower interest rate
decrease ms to increase interest rate |
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What is Money supply based on
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NOT Gold, the market (stopped by nixon)
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finacial intmediatary
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the mieddle bank
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thrift institution
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not a full fledge bank
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Feds funds market
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over night market loan to meet reserve requirement (bank to bank)
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