Macroeconomics Chapter 16 Flashcards

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Vocabulary flashcards for Macroeconomics Chapter 16

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8 Terms

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Transactions demand

Money held for everyday purchases

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Precautionary demand

Money held for emergencies

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Asset demand

Money held as a store of value due to its liquidity and lack of risk

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Discount rate

Interest rate the Fed charges for reserves it lends to banks

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Expansionary monetary policy

Used to increase AD or shift it to the right

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Contractionary monetary policy

Used to decrease AD or shift it to the left

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Income velocity of money

Number of times a dollar is spent on goods and services per year

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Federal funds rate

The interest rate at which banks borrow reserves from other banks.