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Study sets matching "money chapter 14"

34 terms
Chapter 14 Money and Banking
asset
asset-liability time mismatch
balance sheet
bank capital
item of value owned by a firm or an individual
a bank's liabilities can be withdrawn in the short term while…
an accounting tool that lists assets and liabilities
a bank's net worth
asset
item of value owned by a firm or an individual
asset-liability time mismatch
a bank's liabilities can be withdrawn in the short term while…
19 terms
Chapter 14 - Money and Banking
money
medium of exchange
barter
unit of accounting
anything customarily used as a medium of exchange, a unit of…
use of money for exchange for goods and services
exchange of goods and services for other goods and services
use of money as a yardstick for comparing the values of goods…
money
anything customarily used as a medium of exchange, a unit of…
medium of exchange
use of money for exchange for goods and services
30 terms
Chapter 14 - Money and Banking
money
the three functions of money
medium of exchange
barter
anything customarily used as a medium of exchange, a unit of…
1: medium of exchange... 2: unit of accounting... 3: store of value
a seller will accept it in exchange for a good or service
exchange of goods or services for other goods and services
money
anything customarily used as a medium of exchange, a unit of…
the three functions of money
1: medium of exchange... 2: unit of accounting... 3: store of value
16 terms
Money and Banking Chapter 14
monetary base
Reserves
required reserves
excess reserves
the sum of the Fed's monetary liabilities (currency in circul…
deposits at the Fed plus currency that is physically held by…
reserves that the Fed requires banks to hold
any additional reserves the banks choose to hold
monetary base
the sum of the Fed's monetary liabilities (currency in circul…
Reserves
deposits at the Fed plus currency that is physically held by…
34 terms
Chapter 14: Money and Banking
barter
commodity money
commodity-backed currencies
double coincidence of wants
literally, trading one good or service for another, without u…
an item that is used as money, but which also has value from…
are dollar bills or other currencies with values backed up by…
a situation in which two people each want some good or servic…
barter
literally, trading one good or service for another, without u…
commodity money
an item that is used as money, but which also has value from…
37 terms
Chapter 14: Banking and Money
Money Supply
who controls money?
2 Main measures of money supply?
M1
= total of money in circulation
Federal Reserve
M1= the narrowest definition... M2= broader definition
= currency (bills and coins) in circulation + check able depo…
Money Supply
= total of money in circulation
who controls money?
Federal Reserve
27 terms
CHAPTER 14 MONEY
Federal reserve system (FRS)
Federal Reserve Notes
Barter economy
Commodity money
Privately owned, publicly controlled central bank of the USA
Paper currency
A moneyless economy that relies on trade
Money that has an alternative use as an economic good,, or co…
Federal reserve system (FRS)
Privately owned, publicly controlled central bank of the USA
Federal Reserve Notes
Paper currency
22 terms
Chapter 14 Money
Money
Currency in Circulation
Checkable Bank Deposits
Money Supply
any asset that can easily be used to purchase goods and servi…
cash held by the public
bank accounts on which people can write checks
the total value of financial assets in the economy that are c…
Money
any asset that can easily be used to purchase goods and servi…
Currency in Circulation
cash held by the public
87 terms
Money and Banking Chapter 14
1) The payoffs for financial derivativ…
2) Which of the following is not a fin…
3) By hedging a portfolio, a bank mana…
4) Hedging risk for a short position i…
C) previously issued securities.
A) Stock
A) reduces interest-rate risk.
A) taking a long position.
1) The payoffs for financial derivativ…
C) previously issued securities.
2) Which of the following is not a fin…
A) Stock
34 terms
Chapter 14: Money and Banking
asset
asset-liability time mismatch
balance sheet
bank capital
item of value owned by a firm or an individual
a bank's liabilities can be withdrawn in the short term while…
an accounting tool that lists assets and liabilities
a bank's net worth
asset
item of value owned by a firm or an individual
asset-liability time mismatch
a bank's liabilities can be withdrawn in the short term while…
14 terms
Chapter 14 Banking Your Money
Checking account
Deposit
Check
Minimum
A bank account from which a depositor can withdraw money usin…
money put in a bank account
A written order directing a bank to pay a certain amount of m…
The lowest amount of money a depositor can keep in an account…
Checking account
A bank account from which a depositor can withdraw money usin…
Deposit
money put in a bank account
17 terms
Money & Banking: Chapter 14
Three actors of the money supply
Money Supply
Monetary Base
Currency in circulation
1) Federal Reserve... 2) Banking System... 3) Nonbank Public
= Monetary base X Money Multiplier
The sum of bank reserves and currency in circulation.... -Fed c…
= Currency outstanding - vault cash
Three actors of the money supply
1) Federal Reserve... 2) Banking System... 3) Nonbank Public
Money Supply
= Monetary base X Money Multiplier
20 terms
Chapter 14- Managing Your Money
Income
Gross Pay
Net Pay
Withhold
an amount of money your receive or earn regularly
The total pay you earn before deductions
The amount of money you take home
Take out money from your paycheck
Income
an amount of money your receive or earn regularly
Gross Pay
The total pay you earn before deductions
14 terms
Chapter 14: Managing Your Money
budget
expenses
savings
fixed expenses
plan to manage your money to reach your goals.
things you spend money on.
money you keep for the future.
are basic expenses that are about the same each month.
budget
plan to manage your money to reach your goals.
expenses
things you spend money on.
19 terms
Economics Chapter 14 Money and Banking
money
medium of exchange
barter
unit of accounting
anything customarily used as a medium of exchange, a unit of…
use of money for exchange for goods and services
exchange of goods and services for other goods and services
use of money as a yardstick for comparing the values of goods…
money
anything customarily used as a medium of exchange, a unit of…
medium of exchange
use of money for exchange for goods and services
18 terms
Economics Chapter 14 - Money and Banking
Money
Medium of Exchange
Barter
Unit of Accounting
Anything customarily used as a medium of exchange, a unit of…
Use of money in exchange for goods or services
Exchange of goods and services for other goods and services
Use of money as a yardstick for comparing the values of goods…
Money
Anything customarily used as a medium of exchange, a unit of…
Medium of Exchange
Use of money in exchange for goods or services
27 terms
Chapter 14: The Money Supply Process
The Federal Reserve System is the ____…
As financial intermediaries, banks:
The players in the money supply proces…
By definition, when the Fed conducts a…
central bank; the conduct of monetary policy
accept deposits and make loans
the treasury
buying bonds and increasing the quantity of reserves
The Federal Reserve System is the ____…
central bank; the conduct of monetary policy
As financial intermediaries, banks:
accept deposits and make loans
18 terms
Chapter 14: The Money Supply Process
money supply process
Federal Reserve System's balance sheet
monetary base
Currency in circulation
mechanism that determines the level of the money supply... Play…
Asset: Securities, Loans to financial institutions... Liabilitie…
the Fed's monetary liabilities + the US Treasury's monetary l…
mount of currency in the hands of the public
money supply process
mechanism that determines the level of the money supply... Play…
Federal Reserve System's balance sheet
Asset: Securities, Loans to financial institutions... Liabilitie…
15 terms
Money & Banking Chapter 14
Money Supply
Monetary base
Currency in circulation
Vault cash
Monetary Base X Monetary multiplier
The sum of the banks reserves and the currency in circulation…
Paper money and coins held by the non bank public
Currency held by banks
Money Supply
Monetary Base X Monetary multiplier
Monetary base
The sum of the banks reserves and the currency in circulation…
33 terms
Money Management Chapter 14
Real Property
Personal property
D.R.O.A. (Deposit, Receipt, Offer and…
Requirements for the D.R.O.A.
the dwelling and the land on which the dwelling is situated (…
movable items such as furniture, rugs, etc. that aren't inclu…
1) description of the property, including the tax map key (a…
1) purchaser must submit a monetary Deposit to show the Offer…
Real Property
the dwelling and the land on which the dwelling is situated (…
Personal property
movable items such as furniture, rugs, etc. that aren't inclu…
20 terms
Money & Banking - Chapter 14
balance sheet - assets
balance sheet - liabilities
balance sheet - assets (before crisis)
balance sheet - liabilities (before cr…
2/3 Treasuries... 1/3 mortgage backed securities
50% reserves... 40% currency... 10% other deposits
90% Treasuries... MBS nonexistent
reserves quite small... 90% currency (more tangible liability si…
balance sheet - assets
2/3 Treasuries... 1/3 mortgage backed securities
balance sheet - liabilities
50% reserves... 40% currency... 10% other deposits
20 terms
Chapter 14 - Money & Banking
Money
4 Characteristics of money
3 Functions of Money
M-1
object that is accepted by people as payment for goods or ser…
- Portable: Lightweight and easy to handle... - Divisible: easil…
- Medium of Exchange: used to buy and sell things... - Store of…
only the most liquid forms of money
Money
object that is accepted by people as payment for goods or ser…
4 Characteristics of money
- Portable: Lightweight and easy to handle... - Divisible: easil…
16 terms
Chapter 14 Money & Banking
The Three Players in the Money Supply…
_____ are the Fed's holdings of U.S. T…
_____________ are primarily made throu…
Assets of the Fed
1. The central bank (i.e., The Fed in the U.S.)... 2. Banks... 3. D…
Securities
Loans to financial institutions
Securities and Loans to financial institutions
The Three Players in the Money Supply…
1. The central bank (i.e., The Fed in the U.S.)... 2. Banks... 3. D…
_____ are the Fed's holdings of U.S. T…
Securities
10 terms
Chapter 14 - Money and the Economy
Equation of Exchange Velocity
Simple Quantity theory of Money
One-Shot Inflation
Continued Inflation
...
...
...
...
Equation of Exchange Velocity
...
Simple Quantity theory of Money
...
Chapter 14-Money and Banking
The Players in Money Supply Process
FED Balance sheet
Monetary base
Currency in ciruculation
1. Central bank 2.Banks (depository institutions) 3. Depositors
Assets-government securities, discount loans ... Liabilities-Cur…
sum of the FED's monetary liabilities and the US Treasury lia…
FED liability; bank notes
The Players in Money Supply Process
1. Central bank 2.Banks (depository institutions) 3. Depositors
FED Balance sheet
Assets-government securities, discount loans ... Liabilities-Cur…
37 terms
Chapter 14: Money and Banking
Money
Example of money
Money does not mean
Example of wealth
is an asset that can be directly used to make purchases
cash, balance in checking account or debit card
wealth
money, stocks, bonds, real estate, jewelry, art
Money
is an asset that can be directly used to make purchases
Example of money
cash, balance in checking account or debit card
34 terms
Chapter 14: Money and Banking
Asset
Asset-Liability Time Mismatch
Balance Sheet
Bank Capital
Item of value owned by a firm or an individual
A bank's liabilities can be withdrawn in the short term while…
An accounting tool that lists assets and liabilities
A bank's net worth
Asset
Item of value owned by a firm or an individual
Asset-Liability Time Mismatch
A bank's liabilities can be withdrawn in the short term while…
20 terms
Chapter 14 Money & Banking
3 functions of money
Medium of Exchange
Unit of Accounting
Store Value
1. Medium of exchange... 2. Unit of accounting... 3. Store Value
use of money in exchange for goods or services
use of money as a yard stick for comparing the values of good…
use of money to store purchasing power for later use
3 functions of money
1. Medium of exchange... 2. Unit of accounting... 3. Store Value
Medium of Exchange
use of money in exchange for goods or services
53 terms
Chapter 14 Money and Banking
Monetary policy
Fiscal Policy
Barter
Double Coincidence of Wants
involved with Money, banking, interest rates
involved with Gov. Spending, taxes, and borrowing
trading one good for another good
Situation in which 2 people each want some good or service th…
Monetary policy
involved with Money, banking, interest rates
Fiscal Policy
involved with Gov. Spending, taxes, and borrowing
11 terms
Money and the Economy (Chapter 14)
Income Effect
Continued Inflation
Liquidity Effect
Velocity
The change in the interest rate due to a change in Real GDP.
A continued increase in the price level.
The change in the interest rate due to a change in the supply…
The average number of times a dollar is spent to buy final go…
Income Effect
The change in the interest rate due to a change in Real GDP.
Continued Inflation
A continued increase in the price level.
43 terms
Chapter 14- Money and Banking
Money
Barter
4 Problems with bartering
Indirect barter
Anything that people are willing to accept in payment for goo…
Individual exchange of goods and services by trading output d…
1. High transaction costs: need to find person to trade with…
A person accepts a good not for consumption but to use in fut…
Money
Anything that people are willing to accept in payment for goo…
Barter
Individual exchange of goods and services by trading output d…
34 terms
Chapter 14: Money and Banking
Barter
Functions for Money
Medium of Exchange
Store of Value
Trading one good or service for another
Medium of Exchange... Store of Value... Unit of Account... Standard of…
Money acts as a n intermediary between the buyer and the seller
Has roughly the same value in the future
Barter
Trading one good or service for another
Functions for Money
Medium of Exchange... Store of Value... Unit of Account... Standard of…
14 terms
Money and Banking Chapter 14
monetary base
currency in circulation
vault cash
bank reserves
the sum of bank reserves and currency in circulation
paper money and coins held by the nonbank public
currency held by banks
bank deposits with the Fed plus vault cash
monetary base
the sum of bank reserves and currency in circulation
currency in circulation
paper money and coins held by the nonbank public
11 terms
money and banking chapter 14
velocity of money
quantity equation of money
bimetallism
printing money
ratio of nominal GDP to the money supply (V= PY/M); shows how…
relationship among the money supply, velocity and nominal GDP…
monetary system in which money is backed by both gold and sil…
financing government budget deficits by selling bonds to the…
velocity of money
ratio of nominal GDP to the money supply (V= PY/M); shows how…
quantity equation of money
relationship among the money supply, velocity and nominal GDP…
16 terms
Chapter 14: The Money Supply Process
borrowed reserves
discount rate
excess reserves
float
a bank's borrowing from the Fed
the interest rate that the Federal Reserve charges banks on d…
reserves in excess of required reserves
cash items in process of collection at the Fed minus deferred…
borrowed reserves
a bank's borrowing from the Fed
discount rate
the interest rate that the Federal Reserve charges banks on d…
34 terms
Chapter 14: Money and Banking
Barter system:
Double coincidence of wants
money serves as 4 functions:
money serving as a medium of exchange:
economies without money use the barter system- literal tradin…
economy without money use this system- exchange between 2 peo…
1) medium of exchange ... 2) store of value... 3) unit of account... 4…
money acts as an intermediary between the buyer and the selle…
Barter system:
economies without money use the barter system- literal tradin…
Double coincidence of wants
economy without money use this system- exchange between 2 peo…
29 terms
Chapter 14 - Money + Banking
Money
Currency in circulation
Chequable deposits (demand deposits)
Money supply
Asset that can easily be used to purchase goods + services
Cash held by the public
Bank accounts on which people can write cheques
Total value of financial assets in the economy that are consi…
Money
Asset that can easily be used to purchase goods + services
Currency in circulation
Cash held by the public
40 terms
Economics Chapter 14: Money
Regulation Z
bank holding company
currency
coin
provision extending truth in lending disclosures to consumers
company that owns one or more banks
paper component of money supply, federal reserve notes
metallic component of money
Regulation Z
provision extending truth in lending disclosures to consumers
bank holding company
company that owns one or more banks
15 terms
Chapter 14 - Money and Banking
Characteristics of Money
Functions of Money
M-1 : Spendable Money... Currency - ... De…
M-2 : (M-1 PLUS the Convertible Money…
Portability - light and easy to handle... Divisability - easy t…
- Medium of exchange, A store of Value, A unit of Account
Money that serves as a medium of exchange ... - Paper money and…
- PLUS = Savings deposits, time deposits, and money market mu…
Characteristics of Money
Portability - light and easy to handle... Divisability - easy t…
Functions of Money
- Medium of exchange, A store of Value, A unit of Account
11 terms
Chapter 14- Money and the Economy
Equation of Exchange
Velocity
Simple Quantity Theory of Money
One-Shot Inflation
An identity stating that the money supply (M) times velocity…
The average number of times a dollar is spent to buy final go…
The theory which assumes that velocity (V) and Real GDP (Q) a…
A one-time increase in the price level; an increase in the pr…
Equation of Exchange
An identity stating that the money supply (M) times velocity…
Velocity
The average number of times a dollar is spent to buy final go…
19 terms
Chapter 14: Money and Banking
money
medium of exchange
barter
unit of accounting
anything customarily used as a medium of exchange, a unit of…
use of money for exchange for goods or services
exchange of goods and services for other goods and services
use of money as a yardstick for comparing the values of goods…
money
anything customarily used as a medium of exchange, a unit of…
medium of exchange
use of money for exchange for goods or services
26 terms
Money and Banking Chapter 14
Money Supply Simple Equation
Monetary Base is Determined by
Money Multiplier is determined by
Monetary Base (or high-powered money)
Monetary Base X Money Multiplier
The Fed
The Fed, The Banking System, and the Nonbanking public
the sum of bank reserves and... currency in circulation.
Money Supply Simple Equation
Monetary Base X Money Multiplier
Monetary Base is Determined by
The Fed
24 terms
Chapter 14 Money and Banking
Federal Reserve System
Federal Reserve Note
Barter Economy
Commodity Money
privately owned, publicly controlled, central bank of the Uni…
paper currency issued by the Fed that eventually replaced all…
moneyless economy that relies on trade or barter
money that has an alternative use as an economic good; gunpow…
Federal Reserve System
privately owned, publicly controlled, central bank of the Uni…
Federal Reserve Note
paper currency issued by the Fed that eventually replaced all…
30 terms
money and banking chapter 14
3 players in money supply process
monetary base / high powered money
Monetary base
fed buys bonds from dealer T account
central bank... Banks ... Depositors
Feds liabilities + us treasury currency
MB = C +R
Assets: increase reserves ... liabilities: increase securities
3 players in money supply process
central bank... Banks ... Depositors
monetary base / high powered money
Feds liabilities + us treasury currency
Chapter 14: Money and Banking
Money
Medium of Exchange
Barter
Unit of Account
anything that serves as a medium of exchange, a unit of accou…
anything that is used to determine value during the exchange…
the direct exchange of one set of goods or services for another
a way to compare the values of goods and services
Money
anything that serves as a medium of exchange, a unit of accou…
Medium of Exchange
anything that is used to determine value during the exchange…
16 terms
Chapter 14: Money and Banking
Broad Definition of Money
Barter
Problems of Barter
Indirect Barter
Anything that people are willing to accept in payment for goo…
Individual exchange of goods and services by trading output d…
High transactions costs, varying prices for same good, lack o…
A person accepts a good not for consumption, but to use in fu…
Broad Definition of Money
Anything that people are willing to accept in payment for goo…
Barter
Individual exchange of goods and services by trading output d…
12 terms
Chapter 14: Money and the Economy
Equation of Exchange
Simple Quantity Theory of Money
Monetarist View of Economy
One-Shot Inflation
M x V = P x Q... M=money supply... V=velocity... P=price... Q=real GDP
M x V ≡ P x Q (V and Q have line over them to designate that…
Monetarists believe:... ~the economy is self-regulating.... ~change…
A one-time increase in the price level. An increase in the pr…
Equation of Exchange
M x V = P x Q... M=money supply... V=velocity... P=price... Q=real GDP
Simple Quantity Theory of Money
M x V ≡ P x Q (V and Q have line over them to designate that…
19 terms
Chapter 14: Money and Banking
money
medium of exchange
barter
unit of accounting
anything customarily used as a medium of exchange, a unit of…
use of money in exchange for goods or services
exchange of goods and services for other goods and services
use of money as a yardstick for comparing the values of goods…
money
anything customarily used as a medium of exchange, a unit of…
medium of exchange
use of money in exchange for goods or services
43 terms
Chapter 14 money and banking
business cycles in different countries…
the correlation of business cycles acr…
shocks are transmitted internationally…
an exchange rate is the amount of
shocks hit several countries at once (ex oil prices) and beca…
1970's and 1980's than in the 1990s. because of the world wid…
trade effects, interest rate effects and exchange rate effects
one currency needed to purchase a unit of another currency
business cycles in different countries…
shocks hit several countries at once (ex oil prices) and beca…
the correlation of business cycles acr…
1970's and 1980's than in the 1990s. because of the world wid…
44 terms
Chapter 14 - Money and Banking
Money
Medium of exchange
Store of value
Unit of account
Any object generally accepted by people as pay,ent for goods…
Used to trade gods and services (instead of barter)
Can be used for future purchases
Allows measurement of the relative value of goods and services
Money
Any object generally accepted by people as pay,ent for goods…
Medium of exchange
Used to trade gods and services (instead of barter)
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