________: all the assets in M1 plus some additional assets that are usable in making payments but at greater cost or inconvenience than currency or checks.
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Financial intermediaries
________: firms that extend credit to borrowers using funds raised from savers.
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Medium of exchange
________: asset used in purchasing goods and services.
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Barter
________: direct trade of goods or services for other goods /services.
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M1
________: sum of currency outstanding and balances held in checking accounts.
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Monetary policy
________: determination of the nation's money supply.
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Velocity
________: measure of the speed at which money changes hands in transactions involving final goods and services, or, equivalently, nominal GDP divided by the stock of money.
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Quantity equation
________: money times velocity equals nominal GDP.
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Unit of account
________: basic measure of economic value.
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Financial intermediaries
firms that extend credit to borrowers using funds raised from savers
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Money
any asset that can be used in making purchases
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Medium of exchange
asset used in purchasing goods and services
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Barter
direct trade of goods or services for other goods/services
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Unit of account
basic measure of economic value
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Store of value
asset that serves as a means of holding wealth
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M1
sum of currency outstanding and balances held in checking accounts
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M2
all the assets in M1 plus some additional assets that are usable in making payments but at greater cost or inconvenience than currency or checks
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Bank reserves
cash or similar assets held by commercial banks for the purpose of meeting depositor withdrawals and payments
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100 percent reserve banking
situation in which banks' reserves equal 100 percent of their deposits
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Reserve-deposit ratio
bank reserves divided by deposits
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Fractional-reserve banking system
banking system in which bank reserves are less than deposits so that the reserve-deposit ratio is less than 100 percent
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Federal Reserve System (or the Fed)
central bank of the United States
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Monetary policy
determination of the nation's money supply
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Open-market purchase
purchase of government bonds from the public by the Fed for the purpose of increasing the supply of bank reserves and the money supply
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Open-market sale
sale by the Fed of government bonds to the public for the purpose of reducing bank reserves and the money supply
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Open-market operations
open-market purchases and open-market sales
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Velocity
measure of the speed at which money changes hands in transactions involving final goods and services, or, equivalently, nominal GDP divided by the stock of money
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Quantity equation
money times velocity equals nominal GDP
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Financial intermediaries
Firms that extend credit to borrowers using funds raised from savers
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Money
Any asset that can be used in making purchases
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Medium of exchange
Asset used in purchasing goods and services
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Barter
Direct trade of goods or services for other goods/services
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Unit of account
Basic measure of economic value
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Store of value
Asset that serves as a means of holding wealth
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M1
Sum of currency outstanding and balances held in checking accounts
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M2
All the assets in M1 plus some additional assets that are usable in making payments but at greater cost or inconvenience than currency or checks
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Bank reserves
Cash or similar assets held by commercial banks for the purpose of meeting depositor withdrawals and payments
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100% reserve banking
Situation in which banks' reserves equal 100% of their deposits
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Reserve-deposit ratio
Bank reserves divided by deposits
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Fractional-reserve banking system
Banking system in which bank reserves are less than deposits so that the reserve-deposit ratio is less than 100%
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Federal Reserve System (or the Fed)
Central bank of the United States
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Monetary policy
Determination of the nation's money supply
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Open-market purchase
Purchase of government bonds from the public by the Fed for the purpose of increasing the supply of bank reserves and the money supply
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Open-market sale
Sale by the Fed of government bonds to the public for the purpose of reducing bank reserves and the money supply
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Open-market operations
Open-market purchases and open-market sales
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Velocity
Measure of the speed at which money changes hands in transactions involving final goods and services, or, equivalently, nominal GDP divided by the stock of money
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Flashcard (80)