exam 1 Flashcards

1
Q

who is responsible for the trend or long-run behavior of the money supply

A

Central Bank

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2
Q

who is the central bank in the United States

A

The Federal Reserve System

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3
Q

what do the feds do

A

monetary policy

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4
Q

refers to the management of the money supply and interest rates

A

monetary policy

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5
Q

money supply increases more rapidly than the output of good and services

A

inflation

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6
Q

a continuing decline in prices and is more damaging to a nations economic health than inflation

A

deflation

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7
Q

what is a claim on the issuer’s future income or assets

A

security

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8
Q

what is a debt security that promises to make payments periodically for a specified period of time?

A

bond

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9
Q

the cost of borrowing or the price paid for the rental of funds. These are determined by market forces of supply and demand

A

interest rate

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10
Q

appreciation causes:

A
  • higher prices to foreign buyers of exports
  • lower prices to domestic consumers of imports
  • a trade deficit
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11
Q

Depreciation causes:

A
  • lower prices to foreign buyers of exports
  • higher prices to domestic consumers o imports
  • a trade surplus
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12
Q

institutions that borrow funds from people who have saved and make loans to other people

A

financial intermediaries

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13
Q

institutions that accept deposits and make loans

A

banks

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14
Q

government spending and taxation

A

fiscal policy

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15
Q

anything that is generally accepted in payment for goods or services or in the repayment of debts: a stock concept

A

Money

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16
Q

the total collection of pieces of property that serve to store value (assets less liabilities)

A

Wealth

17
Q

flow of earnings per unit

A

Income

18
Q

the direct exchange of goods and services which is how exchange occurs when there is no money

A

Barter

19
Q

problems of barter exchange:

A
  • requires a double coincidence of wants
  • multiple prices for each good
  • can be difficult to store wealth
20
Q

the way funds are transferred to sellers of goods and services

A

payments system

21
Q

how easily and costly an asset can be converted for money

A

Liquidity

22
Q

the total amount of money in the economy

A

money supply

23
Q

measures of the money supply

A

monetary aggregates

24
Q

the primary measure of the money supply. Consists of currency in circulation, checkable deposits, and nonbank traveler’s checks

A

M1

25
Q

savings deposits, small time deposits, and retail money-market mutual funds

A

M2

26
Q

the transfer of funds out of the m1 measure of money to MMDAs to avoid reserve requirements

A

sweep programs

27
Q

the use of another country’s currency to replace the domestic currency

A

dollarization

28
Q

a group of countries adopt a common currency

A

currency union