Review for Chapters 10 & 16 Flashcards

0
Q

Bank

A

An institution for receiving, keeping, and lending money

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1
Q

Default

A

Failure to pay back a loan.

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2
Q

Cost-push theory

A

Theory that inflation occurs when producers raise prices to meet increased costs.

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3
Q

Demand-pull theory

A

Theory that inflation occurs when demand for goods and services exceeds existing supplies.

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4
Q

Discount rate

A

Rate the federal reserve charges for loans to commercial banks.

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5
Q

Federal Reserve System

A

The nation’s central banking system

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6
Q

Federal open market committee

FOMC

A

Federal Reserve committee that makes key decisions about interest rates and the growth of the United States money supply.

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7
Q

Federal Deposit Insurance Corporation (FDIC)

A

The government agency that insures customer deposits if a bank fails.

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8
Q

Interest

A

The price paid for the use of borrowed money
Or
Money earned by deposited funds

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9
Q

Board of Governors

A

The 7 member boards that overseas the Federal Reserve System

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10
Q

Easy money policy (loose money policy)

A

Monetary policy that increases the money supply

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11
Q

Fractional reserve banking

A

Banking system that keeps only a fraction of funds in hand and lends out the remainder

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12
Q

Federal funds rate

A

Interest rate banks charge each other for loans

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13
Q

Federal advisory council

A

The research arm of the federal reserve

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14
Q

Hyperinflation

A

Inflection that is out of control; very high inflation

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15
Q

Money

A

Anything that can serve as a medium of exchange, a unit of account, and a store of value.

16
Q

Monetary policy

A

Actions the Federal reserve takes to influence the level of real GDP and the rate of inflation in the economy

17
Q

Principal

A

The amount of money borrowed.

18
Q

Recession

A

A prolonged economic contraction

19
Q

Required reserve ratio

A

Ratio of reserves to deposits required of banks by the Federal Reserve

20
Q

Open market operations

A

Buying and selling of government securities to alter the supply of money