Macroecon chapter 11 Flashcards
1
Q
Functions of money (3)
A
- Medium of exchange
- Store of value
- Unit of account
2
Q
Δbarter economy
A
Need a double coincidence
3
Q
Formats of money (3)
A
- Physical (metal)
- Paper
- Numerical
4
Q
Gresham Law
A
Legally overvalued currency will drive legally undervalued currency out of circulation
5
Q
Type of reserve (R) (2)
A
- Cash
- Deposit at Central Bank
6
Q
Institutions of the modern banking system (2)
A
- Central bank (Bank of Canada)
- Financial intermediaries
7
Q
Basic functions of BoC (3)
A
- Banker to the commercial bank
- Banker to the federal government
- Regulator of the money supply
8
Q
Commercial bank functions (4)
A
- Intermediaries in credit market
- Interbank activities
- Clearing house
- Profit seeking
9
Q
Commercial bank reserves (5)
A
- Fractional reserve
- Reserve ratio (v)
- Target reserve ratio (v*)
- Excess reserve
- Confidence and risk
10
Q
Reserve ratio formula
A
Reserve/Deposit
11
Q
Assumption in money creation by commercial banks (2)
A
- Constant target reserve ratio
- No cash drain (C=0)
12
Q
Cash drain formula
A
Cash/Deposit
13
Q
ΔDeposit formula
A
ΔReserve/v+c
14
Q
Total deposit formula
A
Total loan + total reserve
15
Q
Money supply formula
A
Currency in circulation + Bank deposit
