Review for Chapters 10 & 16 Flashcards
Bank
An institution for receiving, keeping, and lending money
Default
Failure to pay back a loan.
Cost-push theory
Theory that inflation occurs when producers raise prices to meet increased costs.
Demand-pull theory
Theory that inflation occurs when demand for goods and services exceeds existing supplies.
Discount rate
Rate the federal reserve charges for loans to commercial banks.
Federal Reserve System
The nation’s central banking system
Federal open market committee
FOMC
Federal Reserve committee that makes key decisions about interest rates and the growth of the United States money supply.
Federal Deposit Insurance Corporation (FDIC)
The government agency that insures customer deposits if a bank fails.
Interest
The price paid for the use of borrowed money
Or
Money earned by deposited funds
Board of Governors
The 7 member boards that overseas the Federal Reserve System
Easy money policy (loose money policy)
Monetary policy that increases the money supply
Fractional reserve banking
Banking system that keeps only a fraction of funds in hand and lends out the remainder
Federal funds rate
Interest rate banks charge each other for loans
Federal advisory council
The research arm of the federal reserve
Hyperinflation
Inflection that is out of control; very high inflation