Macro-Economics Chapter 29 & 30
About this set
Created by:
dehankerson on August 20, 2008
Subjects:
economics, principles of economics, fourth edition
Description:
economics, principles of economics, fourth edition. Au: Gregory Mankiw ISBN-13: 978-0-324-55849-x
Classes:
MicroEconomics Intensive: Summer 2008
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31 terms
Terms | Definitions |
|---|---|
 central bank | an institution designed to oversee the banking system and regulate the quantity of money in the economy |
| commodity money | money that takes the form of a commodity with intrinsic value |
| currency | the paper bills and coins in the hands of the public |
| demand deposits | balances in bank accounts that depositors can access on demand by writing a check |
| discount rate | the interest rate on the loans that the Fed makes to banks |
| Federal Reserve | the central bank of the United States |
| flat money | money without intrinsic value that is used as money because of government decree |
| fractional-reserve banking | a banking system in which banks hold only a fraction of deposits as reserves |
| liquidity | the ease with which an asset can be converted into the economy's medium of exchange |
| medium of exchange | an item that buyers give to sellers when they want to purchase good and services |
| monetary policy | the setting of the money supply by policymakers in the central bank |
| money | the set of assets in an economy that people regularly use to buy goods and services from other people |
| money multiplier | the amount of money the banking system generates with each dollar of reserves |
| money supply | the quantity of money available in the economy |
| open-market operations | the purchase and sale of U.S. government bonds by the Fed |
| reserve ratio | the fraction of deposits that banks hold as reserves |
| reserve requirements | regulations on the minimum amount of reserves that banks must hold against deposits |
| reserves | deposits that banks have received but have not loaned out |
| store of value | an item that people can use to transfer purchasing power from the present to the future |
| unit of account | the yardstick people use to post prices and record debts |
| classical dichotomy | the theoretical separation of nominal and real variables |
| Fischer effect | the one-for-one adjustment of the nominal interest rate to the inflation rate |
| inflation tax | the revenue the government raises by creating money |
| menu costs | the costs of changing prices |
| monetary neutrality | the proposition that changes in the money supply do not affect real variables |
| nominal variables | variables measured in monetary units |
| quantity equation | the equation M x V = P x V, which relates the quantity of money, the velocity of money, and the dollar value of the economy's output of good and services |
| quantity equation theory of money | a theory asserting that the quantity of money available determines the price level and that the growth rate in the quantity of money available determines the inflation rate |
| real variables | variables measured in physical units |
| shoeleather costs | the resources wasted when the inflation encourages people to reduce their money holdings |
| velocity of money | the rate at which money changes hands |
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