Money And Banking Chapter 1-6

Front 1

Financial intermediaries

Back 1

institutions that borrow funds from people who have saved and in turn make loans to others.

Front 2

financial crises

Back 2

major disruptions in financial markets that are characterized by sharp declines in asset prices and the failures of many financial and non financial firms.

Front 3

Banks

Back 3

are financial institutions that accept deposits and make loans.

Front 4

Money (money supply)

Back 4

defined as anything that is generally accepted in payment for goods or services or in the repayment of debts.

Front 5

business cycles

Back 5

upward/downward movement of aggregate output produced in the economy.

Front 6

recessions

Back 6

periods of declining aggregate output.

Front 7

security

Back 7

(financial instrument) is a claim on the issuer's future income or assets

Front 8

assets

Back 8

any financial claim or piece of property that is subject to ownership.

Front 9

interest rate

Back 9

the cost of borrowing or the price paid for the rental of funds

Front 10

common stock

Back 10

represents a share or ownership in a corporation.

Front 11

budget deficit

Back 11

the excess of government expenditures over tax revenues for a particular time period, typically a year.

Front 12

budget surplus

Back 12

when tax revenues exceed government expenditures.

Front 13

Securities are _____ for the person who buys them but _____ for the person who issues them.

Back 13

assets, liabilities

Front 14

capital

Back 14

wealth, either financial or physical, that is employed to produce more wealth.

Front 15

In the bond market, as the price increases the interest rate _______

Back 15

decreases.

Front 16

In the bond market, when the price increases and the interest rate decreases, the Quantity demanded of bonds _______

Back 16

Increases.

Front 17

Rate of return on bonds _______ and price decreases.

Back 17

Increases.

Front 18

excess bond supply means _______

Back 18

surplus

Front 19

excess bond demand means ______

Back 19

shortage

Front 20

what increases the demand for Bonds? (5 things)

Back 20

1. increased wealth (expansion)
2. increased rick of asset
3. decrease in liquidity
4. decrease in expected inflation
5. increased expected rate of return.

Front 21

Lower price of bonds, and higher interest rates increases the ______ of bonds.

Back 21

supply

Front 22

What causes supply of bonds to shift to the right? (3)

Back 22

1. increase in expected profits from investments
2. increased expected inflation
3. increased government deficits.

Front 23

The _______ Effect is when expected inflation and interest rates move together.

Back 23

Fisher