Term
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Definition
| a good used as money that also has value independent of its use as money |
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Term
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Definition
1 Medium of exchange
2 Unit of account
3 Store of value
4 Standard of deferred payments |
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Term
| Five criteria for good suitable for use as a medium of exchange |
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Definition
1 the good must be acceptable to most people
2 it should be of standardized quality so that any two units are identical
3 it should be durable so that value is not lost by spoilage
4 it should be valuable relative to its weights so that amounts large enough to be useful in trade can be easily transported
5 the medium of exchange should be divisible because different goods are valued differently |
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Term
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Definition
| central bank of the United States |
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Term
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Definition
| object that has no value except as money |
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Term
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Definition
| means that the government requires people to take money to pay off debts |
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Term
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Definition
| type of economy found in prisons in which mackerals are used as a form of money. |
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Term
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Definition
1 currency
2 the value of all checking account deposits at bank
3 the value of traveler's checks |
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Term
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Definition
1 M1
2 saving account deposits
3 small denomination time deposits (CD)
4 balances in money market deposit accounts in bank
5 noninstitutional money market fund shares |
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Term
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Definition
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Term
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Definition
| deposits that a bank has retained, rather than loaned out or invested |
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Term
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Definition
| the minimum fraction of deposits that banks are required to keep as reserves |
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Term
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Definition
| any reserves banks hold over and above the legal requirement |
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Term
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Definition
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Term
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Definition
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Term
| Simple Deposit Multiplier |
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Definition
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Term
| Difference between simple deposit multiplier and the real world one |
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Definition
1. we assume that no one keeps excess reserves
2. we assume all money is deposited in banks. |
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Term
| Fractional reserves banking system |
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Definition
| bank system were banks keep less than 100 percent of deposits as reserves |
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Term
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Definition
| when many depositors simulaneously decide to withdraw their money |
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Term
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Definition
| caused if many banks experience bank runs |
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Term
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Definition
| federal reserves acts as this for banks in U.S |
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Term
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Definition
| loans made by fed to banks |
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Term
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Definition
| interest rate charged on discount loans |
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Term
| How the Fed manages money supply |
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Definition
1 open market operations
2 discount policy
3 reserves requirements |
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Term
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Definition
| the buying and selling of treasury securities |
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Term
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Definition
1 complete control of volume
2 can make large and small
3 can be implemented quickly |
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Term
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Definition
M*V = P*Y
m= money supply
v=velocity of money
p=price level
Y=real output |
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Term
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Definition
| the average nbumber of times each dollar of the money supply is used to purchase goods and services included in GDP |
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