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18 Cards in this Set

  • Front
  • Back
functions of money
unit of account, storage of value, means of exchange
money supply
all the money avilable in the US economy
money that people can gain access to easily and immediatley to to pay for goods and services. most liquid money: cash, checks, debit card, traveller's checks
multiplier effect
explains how money is created. loans create money
demand deposit
the money in checking accounts, M1 money
the ability to be used as, or directly converted to, cash
federal reserve system created to...
encourage business expanision, restore confindence in banking
Jobs of the FED
monetary policy, clear checks, regulate banks, issue currency, bank for federal government, lender of last resort, confidence in our currency and banking system
Alan Greenspan
Chairman of the FED
monetary policy
how the FED manipulates the money supply in order to regulate the economy
discount rate
rate the Federal Reserve charges for loans to commercial banks
open market operations
the buying and selling of government securities to alter the supply of money
reserve requirement
percent of money that banks are required to keep by the FED
interest rates
the percentage of price paid for the use of borrowed money or money earned by deposited funds
fiscal policy
the use of government spending and revenue collection to influence the economy
expanionist policy
policies that encourage economic growth like spending
contractionary policy
fiscal policies, like lower spending and higher taxes, that reduce economic growth
Laffer Curve
1. lowering taxes increases output because people have incentive to work more and because it puts more $ in the economy
2.government can lower taxes and may actually move towards a surplus by collecting more in revenue
(sideways parabola)