Chapter 2 Flashcards

1
Q

It is under the control of BSP and is completely discretionary

A

Monetary Policy

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2
Q

This is used by the government to be able to control inflation and stabilize currency

A

Monetary Policy

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3
Q

Two ways that the government can influenece the economy

A

monetary policy
fiscal policy

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4
Q

The BSP will lower interest rates and increase the money supply

A

recession

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5
Q

The BSP will raise interest rates and decrease the monet supply

A

Overheated expansion

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6
Q

commonly called as easy money

A

expansionary

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7
Q

commonly called as tight money

A

contractionary

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8
Q

a monetary policy setting that intends to increase the level of liquidity or money supply in the economy qnd which could result in a relatively higher inflation path for the economy

A

expansionary monetary policy

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9
Q

tends to encourage economic activity as more funds are made available for lending by banks

A

enpansionary

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10
Q

a monetary policy setting that intends to decrease the level of liquidity or money supply in the economy and which could also result in a relatively lower inflation lath for the economy

A

contractionary

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11
Q

tends to limit economic activity as less funds are made available for lending by banks

A

contractionary monetary policy

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12
Q

is focused mainly on achieving a low and stable inflation, supportive of the economys growth objective

A

inflation targeting

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13
Q

to increase or reduce liquidity in the financial system, the BSP uses

A

open market operations
accepts fixed-term deposits
offers standing facilities
requires vanking institution too hold reserves

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14
Q

are a key component of monetary policy implementation

A

open market operations

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15
Q

open market operations consists of

A

repurchase transactions
reverse repurchase transactions
outright transactions
foreign exchange swaps

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16
Q

the BSP buys government securities from a bank with a commitment to sell it back at a specified future date at a predetermined rate

A

repurchase or repo transaction

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17
Q

the BSP acts as the seller of government securities and the banks payment has a contractionary effect on liquidity

A

reverse repo

18
Q

refer to the direct purchase or sale by the BSP of its holdings of government securities from or to banking institutions

A

outright transactions

19
Q

refer to transactions involving the actual exchange of two currencies on a specific date at a rate agreed on tge deal date

A

foreign exchange swaps

20
Q

consists of fixed-term deposits by banks and by trust entities of banks and non-bank financial institutions with the BSP

A

Special Deposit Accounts

21
Q

is a standing credit facility provided by the BSP t help banks meet temporary liquidity needs by refinancing the loans they extend to their clients

A

Rediscounting

22
Q

allows a financial institution to borrow money from the BSP using promissory notes and other loan papers of its borrowers as collateral

A

rediscounting facility

23
Q

two types of rediscounting facilities

A

the peso rediscounting facility
the exporters dollar and yen rediscount facility

24
Q

refer to the perventage of bank deposits and deposit substitute liabilities that banks must keep on hand or in deposits with the BSP and therefore may not lend

A

reserve requirements

25
required reserves consist of two forms
regular or statutory reserves liquidity reserves
26
help to reduce bank intermediation costs since they are paid market based interest rates
liquidity reserves
27
8 recent developments and inflation outlook
domestic price conditions inflation expectations inflation outlook demand conditions supply side indicators financial market developments domestic liquidity and credit conditions fiscal developments external developments
28
the sum of the reserve money, reserve eligible government securities
base money
29
represents the average price for a given period of a standard basket of goods and services consumed by a typical filipino family
consumer price index
30
the rate of change in the weighted average prices of all goods and services in the cpi basket
headline inflation
31
the rate of change in the weighted average prices of goods and services typically purchased by consumers
inflation rate
32
an alternative measure of inflation that eliminates transitory effects on the cpi
core inflation
33
refers to the option given to bqnks in complying with the reserve requirement
liquidity reserves
34
the sale or purchase of government securities by the bsp to withdraw liquidity from or inject liquidity into the system
open market operations
35
the sum of savings and time deposits
quasi money
36
the policy interest rate at which the bsp lends to banks with government securities as collateral
repurchase rate
37
is a deposit facility with the bsp designed to facilitate the adoption of the change in the banks mkde of compliance with the liquidity reserve requiremenr
reserve deposit accounts
38
the sum of currency in circulation and reserves of banks which include cash in banks vault and reserve balances
reserve money
39
refers to the proportion of banks deposits and deposit substitute liabilities that banks are required to hold as reserves
reserve requirement
40
the policy interest rate at which the bsp borrows from banks with government securities as collateral
reverse repurchase