Term
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Definition
| Anything of value owned by a person or a firm |
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Term
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Definition
| A situation in which many banks experience runs at the same time |
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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
| Loans the Federal Reserve makes to banks |
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Term
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Definition
| The interest rate the Federal Reserve charges on discount loans |
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Term
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Definition
| Reserves that banks hold over and above the legal requirement |
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Term
| Federal Open Market Committee (FOMC) |
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Definition
| The Federal Reserve committee responsible for open market operations and managing the money supply in the United States |
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Term
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Definition
| The central bank of the United States |
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Term
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Definition
| Money, such as paper currency, that is authorized by a central bank or governmental body and that does not have to be exchanged by the central bank for gold or some other commodity money |
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Term
| Fractional reserve banking system |
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Definition
| A banking system in which banks keep less than 100 percent of deposits as reserves |
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Term
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Definition
| The narrowest definition of the money supply: The sum of currency in circulation, checking account deposits in banks, and holdings of traveler's checks. |
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Term
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Definition
| A broader definition of the money supply: It includes M1 plus savings account balances, small-denomination time deposits, balances in money market deposit accounts in banks, and non-institutional money market fund shares |
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Term
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Definition
| The actions the Federal Reserve takes to manage the money supply and interest rates to pursue macroeconomic policy objectives |
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Term
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Definition
| Assets that people are generally willing to accept in exchange for goods and services or for payment of debts |
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Term
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Definition
| The buying and selling of Treasury securities by the Federal Reserve in order to control the money supply |
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Term
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Definition
| A theory about the connection between money and prices that assumes that the velocity of money is constant |
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Term
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Definition
| The minimum fraction of deposits banks are required by law to keep as reserves |
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Term
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Definition
| Reserves that a bank is legally required to hold, based on its checking account deposits |
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Term
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Definition
| Deposits that a bank keeps as cash in its vault or on deposit with the Federal Reserve |
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Term
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Definition
| The process of transforming loans or other financial assets into securities |
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Term
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Definition
| A financial asset--such as a stock or a bond--that can be bought and sold in a financial market |
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Term
| Simple deposit multiplier |
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Definition
| The ratio of the amount of deposits created by banks to the amount of new reserves |
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Term
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Definition
| The average number of times each dollar in the money supply is used to purchase goods and services included in GDP |
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