Money And The Economy Flashcards
Some money has value just by itself such as what?
Gold coins
Some money has value because a government says it has value such as what?
Fiat currency in the US
Money must be a standard witch which one can measure what?
Value
Over time the value of the dollar ________, but the value must remain fairly ___________.
Changes
Consistent
When economist hold the value of the dollar constant for analysis, they refer to the “_______” value.
Real
When the value of the dollar is allowed to change over time it is referred to as a ___________ ________.
Nominal value
Who issues all the currency so the country can freely trade and interact without regional differences in the value?
National Government
If money is printed in vast quantities, it would do what?
Lose value
The amount of money that can be circulated must be ____________ to avoid money losing its value.
Controlled
The most spendable money is called _____ and includes all the coin, currency, and “demand deposits” held in banks.
M1
A deposit that can be accessed without a time restriction is called?
Demand deposit
What is an example of a demand deposit?
Checking account
A deposit that cannot be used instantaneously in a transaction so is considered less liquid is what?
Time deposits
When looking at the amount of demand that can be generated, we are looking at the amount of money that can be spent, which means we are looking at the what money?
M-1 money
Coin and currency account for only half of the M-1 money, the rest is what?
Demand deposits
There can be no control of _________ without a control of __________ bankers that hold demand deposits.
Money
Commercial
If too much money is in the economy people will spend freely and the economy will push up against what? (Then prices will rise)
It’s production frontier
If too little money is in the economy people will not be able to buy goods and services falling below the production frontier. Causing what?
Unemployment
In order for the banker to pay interest, rents, and salaries it’s necessary that the money be used to what?
Generate more money
The banker ________ money around so the bank earns an income and other people have access to needed ________.
Spreads
Funds
When you make a deposit the money can be _______ to others.
Lent
When you make a deposit money is kept on _________ to take care of withdrawals and day-to-day operations.
Reserve
When you make a deposit money can be ___________ in interest bearing bonds issued by the federal government.
Invested
Once the banker has enough money in the Reserve, the banker attempts to ___________ profit on remaining money.
Maximize
Riskier loans carries a higher rate of what?
Interest
Risk on loans don’t exist when who is the borrower?
Federal government
The economic benefit of the lending process is the purchase of goods and services which creates what?
Jobs
As successive loans are made money is ___________.
Created