Macroeconomics 10 and 11
Terms
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- The direct exchage of goods and services for other goods and services
- Barter
- What sellers generally accept and buyers generally use to pay for goods and services
- Medium of exchange
- An asset that can be used totransport purchasing pwer from one tie period to another
- Store of value
- The property of money that makes it a good medium of exchange as well as a store of value
- Liquidity property of money
- A standard unit that provides a consistent way of quoting prices
- Unit of account
- items used as money that also have intrinsic value in some other use
- Commodity monies
- Items designated as money that are intrinsically worthless
- Fiat or token money
- Money that a government has required to be accepted in settlement of debts
- Legal tender
- The decrease in the value of money that occurs when its supply is increased rapidly
- Currency debasement
- Money that can be directly used for transactions
- Transactions money
- Close substitutes for transactions money, such as savings accounts and money market accounts
- Near monies
- Transaction money plus saving accounts, money market accounts, and other near monies
- Broad money (M2)
- Banks and other institution that act as a link between those who have money to end and those who want to borrow money
- Financial intermediaries
- Occurs when many of those who have claims on a bank (deposits) present them at the same time
- Run on a bank
- Central bank of the United States
- Federal Reserve Bank (the Fed)
- The deposits that a bank has at the Federal Reserve bank must keep as reserves at the Federal Reserve
- Required reserve ratio
- The difference between a bank\'s actual reserves and its required reserves
- Excess reserves
- THe multiple by which deposits can increase for every dollar increase in reserves Equal to 1 divided by the required reserve ratio
- Money multiplier
- One of the functions of the Fed It provides funds to trouble banks that cannot find any other sources of funds
- Lender of last resort
- Interest rate that banks pay to the Fed to borrow from it
- Discount rate
- The pressure that in the past the Fed exerted on member banks to discourage them from borrowing heavily from the Fed
- Moral suasion
- The purchase and sale by the Fed of government securities in the open market
- Open market operations
- The mismatch between the timing of the money inflow to the household and the timing of money outlaw for household expenses
- Nonsynchronization of income and spending
- One reason for holding bonds instead of money
- Speculation motive
- Fed policies that contract the money supply in an effort to restrain the economy
- Tight monetary policy
- Fed policies that expand the money supply in an effort to stimulate the economy
- Easy monetary policy