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54 Cards in this Set
- Front
- Back
The two basic components of the US money supply are.... |
Physical Money and demand deposits |
|
Representative full-bodied money |
Paper money backed by a precious metal |
|
Fiat money |
money created by law. Becomes worthless if gov't fails. |
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Demand deposits are issued by... |
commercial banks and Savings banks |
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Continentals |
fiat money in post-revolutionary war times. Failed horribly and everyone then hated paper money. |
|
MS x VM = GDP |
Money Supply x Velocity of Money = GDP. |
|
credit money |
a future monetary claim |
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Bretton Woods agreement set one ounce of gold to ________ in USD |
35$ |
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Inflation leads to a ________ in purchasing power |
decrease |
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The US wasn't defined in gold after.... |
1973 |
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Primitive economies ______ has occasion to exchange goods or services |
rarely. they were largely self-sufficient. |
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Money |
anything generally accepted as a means of paying for goods and services and for paying off debts. |
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Deposit money is backed by... |
the creditworthiness of the depository institution. |
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Monetarists believe.... |
if the money supply exceeds demand, inflation will occur. |
|
Keynesians believe... |
more money supply = lower interest rates = more consumption = higher GDP. no inflation occurs. |
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Gresham's Law implies that the money worth more will _______ in circulation |
stay |
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What does "liquid" mean? |
Can be converted into money quickly and without significant loss of value |
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Money definition: Medium of exchange |
A means of paying for goods and services through discharging debts |
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The Bretton Woods agreement lasted from
|
1944-1971. |
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Token coins |
Coins containing metal of less value than their stated value |
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Money's most basic function is as a... |
medium of exchange |
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M1 includes... |
currency, demand deposits & other checkable deposits, and traveler's checks. |
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A money market deposit account is an example of... (M1 or M2) |
M2 |
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What do Money Market Mutual funds do? |
issue shares to customers, invest in liquid instruments, and invest in interest-bearing debt instruments. |
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Money _____ always function as a store of purchasing power |
CANNOT |
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credit money |
any circulating money which has little real value relative to it's monetary value. |
|
Money definition: Standard of value |
expresses prices and contracts for deferred payments in terms of the monetary unit |
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Increased credit card usage... |
EXPANDS the money supply |
|
outstanding balances on credit cards & credit card limits are or are not part of the money supply? |
NOT |
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The supply of a currency in the international markets depends on... |
imports of the issuing country. |
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full-bodied money |
when coins have an intrinsic value EQUAL to the value of the metal they contain |
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Types of Depository institutions |
Credit unions, savings banks, and commercial banks. |
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Continentals were backed by... |
possible future tax revenues |
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credit money is backed by... |
creditworthiness of the issuer |
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deposit money is backed by... |
creditworthiness of the depository inst. |
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The savings-investment process |
The transfer of individual savings to business firms in exchange for their securities |
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Functions of money |
Medium of exchange, standard of value, and Store of value. |
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Velocity of Money |
the rate of circulation of the money supply |
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GDP |
a measure of the output of goods and services in an economy |
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A major factor in the Great recession was the amount of debt taken on by... |
everyone. literally everyone. |
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______ as a group are usually a surplus economic unit. |
individuals |
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real assets |
the direct ownership of land, buildings or homes, equipment, inventories, durable goods, and precious metals. |
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Types of financial assets |
money, debt instruments, equity securities, other financial contracts backed by real assets |
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Automatic Transfer Services (ATS) are increasingly used for... |
making direct deposits to, and payments from, checkable deposit accounts. |
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Negotiable Certificate of Deposit (NCD) |
A short-term debt instrument issued by commercial banks in denominations of $100,000
or more with maturities ranging from 1 month - 1 year & that have an active secondary market. |
|
Commercial Paper |
A short-term unsecured promissory note issued by a high credit-quality corporation with maturities of 1-3 months in length & an active secondary market. |
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A banker's acceptance |
a promise of future payment issued by a firm and guaranteed by a bank that is used to finance international trade (maturities range from 1-6 months.) |
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A repurchase agreement |
a short-term debt security sold by a firm or finc inst to another business or inst where the seller agrees to buy back the security at a specified price and date. |
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Federal Funds |
very short-term loans with maturities from 1 day - 1 week made between depository inst. |
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The euro was adopted in... |
1999 |
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RO x PL = GDP |
Real Output x Price Level = GDP |
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credit cards _____ provide credit limits to consumers at the time the cards are issued |
DO |
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Money Market Mutual Funds |
shares to customers and invests the proceeds in highly liquid, very short-maturity, interest-bearing debt instruments called money market investments. |
|
Individual Net worth |
the sum of an individuals money, real assets, and financial assets. |