Finc 409 Ch.2

Front 1

The two basic components of the US money supply are....

Back 1

Physical Money and demand deposits

Front 2

Representative full-bodied money

Back 2

Paper money backed by a precious metal

Front 3

Fiat money

Back 3

money created by law. Becomes worthless if gov't fails.

Front 4

Demand deposits are issued by...

Back 4

commercial banks and Savings banks

Front 5

Continentals

Back 5

fiat money in post-revolutionary war times. Failed horribly and everyone then hated paper money.

Front 6

MS x VM = GDP

Back 6

Money Supply x Velocity of Money = GDP.

Front 7

credit money

Back 7

a future monetary claim

Front 8

Bretton Woods agreement set one ounce of gold to ________ in USD

Back 8

35$

Front 9

Inflation leads to a ________ in purchasing power

Back 9

decrease

Front 10

The US wasn't defined in gold after....

Back 10

1973

Front 11

Primitive economies ______ has occasion to exchange goods or services

Back 11

rarely. they were largely self-sufficient.

Front 12

Money

Back 12

anything generally accepted as a means of paying for goods and services and for paying off debts.

Front 13

Deposit money is backed by...

Back 13

the creditworthiness of the depository institution.

Front 14

Monetarists believe....

Back 14

if the money supply exceeds demand, inflation will occur.

Front 15

Keynesians believe...

Back 15

more money supply = lower interest rates = more consumption = higher GDP. no inflation occurs.

Front 16

Gresham's Law implies that the money worth more will _______ in circulation

Back 16

stay

Front 17

What does "liquid" mean?

Back 17

Can be converted into money quickly and without significant loss of value

Front 18

Money definition: Medium of exchange

Back 18

A means of paying for goods and services through discharging debts

Front 19

The Bretton Woods agreement lasted from

Back 19

1944-1971.

Front 20

Token coins

Back 20

Coins containing metal of less value than their stated value

Front 21

Money's most basic function is as a...

Back 21

medium of exchange

Front 22

M1 includes...

Back 22

currency, demand deposits & other checkable deposits, and traveler's checks.

Front 23

A money market deposit account is an example of... (M1 or M2)

Back 23

M2

Front 24

What do Money Market Mutual funds do?

Back 24

issue shares to customers, invest in liquid instruments, and invest in interest-bearing debt instruments.

Front 25

Money _____ always function as a store of purchasing power

Back 25

CANNOT

Front 26

credit money

Back 26

any circulating money which has little real value relative to it's monetary value.

Front 27

Money definition: Standard of value

Back 27

expresses prices and contracts for deferred payments in terms of the monetary unit

Front 28

Increased credit card usage...

Back 28

EXPANDS the money supply

Front 29

outstanding balances on credit cards & credit card limits are or are not part of the money supply?

Back 29

NOT

Front 30

The supply of a currency in the international markets depends on...

Back 30

imports of the issuing country.

Front 31

full-bodied money

Back 31

when coins have an intrinsic value EQUAL to the value of the metal they contain

Front 32

Types of Depository institutions

Back 32

Credit unions, savings banks, and commercial banks.

Front 33

Continentals were backed by...

Back 33

possible future tax revenues

Front 34

credit money is backed by...

Back 34

creditworthiness of the issuer

Front 35

deposit money is backed by...

Back 35

creditworthiness of the depository inst.

Front 36

The savings-investment process

Back 36

The transfer of individual savings to business firms in exchange for their securities

Front 37

Functions of money

Back 37

Medium of exchange, standard of value, and Store of value.

Front 38

Velocity of Money

Back 38

the rate of circulation of the money supply

Front 39

GDP

Back 39

a measure of the output of goods and services in an economy

Front 40

A major factor in the Great recession was the amount of debt taken on by...

Back 40

everyone. literally everyone.

Front 41

______ as a group are usually a surplus economic unit.

Back 41

individuals

Front 42

real assets

Back 42

the direct ownership of land, buildings or homes, equipment, inventories, durable goods, and precious metals.

Front 43

Types of financial assets

Back 43

money, debt instruments, equity securities, other financial contracts backed by real assets

Front 44

Automatic Transfer Services (ATS) are increasingly used for...

Back 44

making direct deposits to, and payments from, checkable deposit accounts.

Front 45

Negotiable Certificate of Deposit (NCD)

Back 45

A short-term debt instrument issued by commercial banks in denominations of $100,000

or more with maturities ranging from 1 month - 1 year & that have an active secondary market.

Front 46

Commercial Paper

Back 46

A short-term unsecured promissory note issued by a high credit-quality corporation with maturities of 1-3 months in length & an active secondary market.

Front 47

A banker's acceptance

Back 47

a promise of future payment issued by a firm and guaranteed by a bank that is used to finance international trade (maturities range from 1-6 months.)

Front 48

A repurchase agreement

Back 48

a short-term debt security sold by a firm or finc inst to another business or inst where the seller agrees to buy back the security at a specified price and date.

Front 49

Federal Funds

Back 49

very short-term loans with maturities from 1 day - 1 week made between depository inst.

Front 50

The euro was adopted in...

Back 50

1999

Front 51

RO x PL = GDP

Back 51

Real Output x Price Level = GDP

Front 52

credit cards _____ provide credit limits to consumers at the time the cards are issued

Back 52

DO

Front 53

Money Market Mutual Funds

Back 53

shares to customers and invests the proceeds in highly liquid, very short-maturity, interest-bearing debt instruments called money market investments.

Front 54

Individual Net worth

Back 54

the sum of an individuals money, real assets, and financial assets.