Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
24 Cards in this Set
- Front
- Back
|
money
|
the set of assets in an economy that people regularly use to buy goods and services from other people
|
|
|
medium of exchange
|
an item a buyer gives to sellers when they want to purchase goods and services
|
|
|
unit of account
|
the yardstick people use to post prices and record debts
|
|
|
store of value
|
an item that people can use to transfer purchasing power from the present to the future
|
|
|
liquidy
|
the ease with which an asset can be converted into the economy's medium of exchange
|
|
|
commodity money
|
money that takes the form of a commodity with intrinsic value (aka gold, cigarettes)
|
|
|
fiat money
|
money without intrinsic value that is used as money because of government decree
|
|
|
money stock
|
the quantity of money circulating in the economy
|
|
|
currency
|
paper bills and coins in the hands of the public
|
|
|
demand deposits
|
balances in bank accounts that depositors can access on demand by writing a check (or debit card)
|
|
|
M1
|
-Demand deposits
-travelers checks -currency -other checkable deposits |
|
|
M2
|
M1 +
-Savings deposits -Small time deposits -Money market mutual funds -A few minor other categories |
|
|
Federal Reserve (The FED)
|
the central bank of the united states
|
|
|
central bank
|
an institution designed to oversee the banking system and regulate the quantity of money in the economy
|
|
|
organization of the fed?
|
7 board of governors, 1 chairman, 14 year terms, approved by president + congress
|
|
|
monetary policy
|
the setting of the money supply by policymakers in the central bank
|
|
|
organization of the Federal Open Market Commitee (FOMC)?
|
the Fed 7 governors + 12 regional bank presidents
only 5 of the regionals get to vote per meeting (this rotates) |
|
|
Federal Reserve's primary tool to help economy?
|
open-market operation ... the ability to purchase and sell US Govt Bonds
|
|
|
reserves
|
deposits banks have received but not loaned out
|
|
|
fractional-reserve banking
|
a banking system in which banks hold only a fraction of deposits as reserves
|
|
|
reserve ratio
|
the fraction of deposits the bank holds as reserves
|
|
|
money multiplier
|
the amount of money the banking system generates with each dollar of reserves
a reciprocal of the reserve ratio |
|
|
reserve requirements
|
regulations on the minimum amount of reserves that the banks must hold against deposits
|
|
|
discount rate
|
the interest rate on the loans that the Fed makes to banks
|
