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Finance > Chapter 2 > Flashcards

Chapter 2 Flashcards

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1
Q

What are three functions of money?

A
  • Medium of exchange
  • Store of value
  • Unit of account
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2
Q

What is in M2 and not M1?

A

Savings accounts

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3
Q

What are two types of reserves?

A
  • Required Reserves

- Excess Reserves

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4
Q

Explain a yield curve

A

A yield curve explains the interest rate over a period of time. It is mostly upward sloping, but if downward sloping it can explain a recession

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5
Q

What theories can explain a yield curve?

A
  • Expectations Theory
  • Segmented Market Theory
  • Liquidity Premium Theory
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6
Q

Of the following assets which is the most liquid

  • stocks in intel corporation
  • painting by van Gogh
  • used car
  • fine jewelry
A

Stocks in Intel Corporation

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7
Q

If Mary deposits $100 of her currency in her checking account, then…

A

M1 and M2 will not change

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8
Q

Money supply data is generated by who

A

The Fed

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9
Q

Wealth

A

Generally accepted for the repayment of debts

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10
Q

The assets of a typical commercial bank include

A

Commercial loans

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11
Q

Money market mutual funds invest in

A

Federal government Treasury Bills

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12
Q

Treasury Bills

A

Short term securities issued by the federal government

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13
Q

True/False: When funds are deposited in a savings account, the excess reserves of banks are unaffected

A

False

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14
Q

Money

A

Anything that is generally accepted as a means of payment

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15
Q

Liquidity

A

Ease of converting an asset into cash without loss

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16
Q

Money Supply

A

Total amount of money in circulation

17
Q

Required Reserves

A

Funds that banks must hold against deposit liabilities

18
Q

Excess Reserves

A

Reserves held by a bank in excess of those it must hold to meet its reserve requirement

19
Q

Secondary Reserves

A

Short term securities especially T-Bills held by banks to increase their liquidity

20
Q

Commercial Paper

A

Unsecured short term promissory notes issued by the most creditworthy corporations

21
Q

Repurchase Agreement (REPO)

A

Sale of a short term security in which the seller agrees to buy back the security at a specified price

Finance (12 decks)

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