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ECON 1040 > ch 11 money final exam > Flashcards

ch 11 money final exam Flashcards

1
Q

alternative to money

A

bartering

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2
Q

the process people finding each other directly exchanging goods and services

A

bartering

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3
Q

Characteristics of money

A

medium of exchange, unit of account, store value

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4
Q

Money is money because the government says it is money

A

fiat money

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5
Q

anything that is used to buy and sell goods and services

A

money

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6
Q

the function of money that determine the relative value of goods and services

A

unit of account

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7
Q

money is preserved over time

A

store of value

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8
Q

any currency in circulation plus any deposits a the federal reserve

A

monetary base

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9
Q

what involves the money supply M1

A

All the USD in existence
Checkable deposits
Travelers checks (check books)

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10
Q

What involves the money supply M2

A
  1. ) M1 supply
  2. ) Saving Deposits
  3. ) Small Time Deposits
  4. ) retail money mark mutual funds
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11
Q

how do banks create money?

A

making loans

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12
Q

currency in the vaults of banks or deposits banks at the fed

A

reserves

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13
Q

the percentage of deposits that must be kept on reserve

A

required reserve ratio

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14
Q

when banks hold onto small percentage of money and send the rest out in the form of investment

A

Reserve Banking: Fraction

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15
Q

required reserve ratio among most banks

A

10%

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16
Q

formula that calculates total deposits to predict how much is made

A

money multiplier

17
Q

money multiplier formula

A

1/reserve ratio (total reserves)

18
Q

shows demand for interest rates to improve the economy

A

demand for money

19
Q

what does the demand for money deal with in terms of factors

A

real gdp and price level

20
Q

dollars loosing value overtime, interest rates help change the value of the dollar

A

time value of money

21
Q

how to calculate future value of money

A

(present value)(t+r)

22
Q

who determines the supply of money

A

central bank

23
Q

what does the equilibrium in the money market determine?

A

Interest rates

ECON 1040 (11 decks)

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