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26 Cards in this Set
- Front
- Back
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Silver |
commodity money |
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which of the following functions of money woukd be violated if inflation were high? |
store of value |
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Dollar bills in the modern economy serve as money because... |
people have confidence that others will accept them as money
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a bartender economy is an economy where... |
goods and services are exchanged for other goods and services |
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a major source of inefficiency in barter economies is that they require... |
a double coicidence of wants in exchange |
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commodity money is a good |
used as money that also has a value independent of its use as money |
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functions that money serves: |
1. medium of exchange 2. unit of account 3. store of value |
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Liquidity |
the ease with which a given asset can be converted to a medium exchange |
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standard of deferred payment |
selling something today in exchange for money in the future |
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paper currency |
fiat money |
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a good can only serve as money if... |
citizens accept the good as a means of payment for transactions and debts |
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the purchase of Treasury securities by the Federal Reserve will... |
increase the quantityof reserves held by bands |
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the decrease the money supply, the Federal Reserve could... |
conduct an open market sale of Treasury securities |
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a decrease in the dicount rate... |
increases bank reserves and increases the money supply |
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a decrease in the reserve requirement... |
increases bank reserves and increases the money supply |
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a fractional reserve banking system is one in which banks hold less than 100% of..... |
deposits in reserves |
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lowering the discount rate will... |
increase reserves encourage banks to make more loans increase the money supply |
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lowering the reserve requirement will... |
increase excess reserves encourage banks to make more loans increase money supply |
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Quantity Theory of Money states inflation rate equals... |
growth rate of money supply - growth rate of real output |
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objective of fiscal policy? |
high rates of economic growth |
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Automatic stabilizers |
-increase in the amount that government collects in taxes when economy expands -decrease in the amount that government collects in taxes when economy goes in recession |
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congress and the president carry out fiscal policy through changes in... |
government purchases and taxes |
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tax cuts on business income |
increases aggregate demand |
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expansionary fiscal policy will |
shift the aggregate demand curve to the right |
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tax increases on business income decrease aggregate demand by decreasing |
business investment spending |
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multiplier effect |
increases in consumption spending that result from an initial increase in autonomous expenditures |
