Create an account
Medium of exchange
anything that is generally accepted as a standard of value and a measure of wealth in a particular country or region
Store of value
an item that people can use to transfer purchasing power from the present to the future
narrowest measure of the money supply that includes all coins and paper bills in circulation, traveler's checks, checking account balances, and balances in credit unions
All of M1 + less immediate (liquid) forms of money to include savings, money market mutual funds, and small denomination time deposits.
The Federal Open Market Committee is the most powerful committee of the FED, because it makes the decisions that affect the economy as a whole by manipulating the money supply.
a financial statement that reports assets, liabilities, and owner's equity on a specific date
Fractional Reserve Banking
a banking system that keeps only a fraction of funds on hand and lends out the remainder
policy that involves changing the rate of growth of the money supply in circulation in order to affect the cost and availability of credit
the rate of interest set by the Federal Reserve that member banks are charged when they borrow money through the Federal Reserve System
the economic condition in which credit is difficult to secure and interest rates are high
Prime Interest Rate
the interest rate on short-term loans that banks charge their commercial customers with high credit ratings
Velocity of Money
the average number of times each dollar in the money supply is used to purchase goods and services included in GDP
the idea that monetary policy may be more successful in slowing expansions and controlling inflation than in extracting the economy from severe recession
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