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23 Cards in this Set
- Front
- Back
Financial intermediaries
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institutions that borrow funds from people who have saved and in turn make loans to others.
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financial crises
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major disruptions in financial markets that are characterized by sharp declines in asset prices and the failures of many financial and non financial firms.
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Banks
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are financial institutions that accept deposits and make loans.
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Money (money supply)
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defined as anything that is generally accepted in payment for goods or services or in the repayment of debts.
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business cycles
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upward/downward movement of aggregate output produced in the economy.
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recessions
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periods of declining aggregate output.
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security
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(financial instrument) is a claim on the issuer's future income or assets
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assets
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any financial claim or piece of property that is subject to ownership.
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interest rate
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the cost of borrowing or the price paid for the rental of funds
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common stock
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represents a share or ownership in a corporation.
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budget deficit
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the excess of government expenditures over tax revenues for a particular time period, typically a year.
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budget surplus
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when tax revenues exceed government expenditures.
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Securities are _____ for the person who buys them but _____ for the person who issues them.
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assets, liabilities
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capital
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wealth, either financial or physical, that is employed to produce more wealth.
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In the bond market, as the price increases the interest rate _______
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decreases.
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In the bond market, when the price increases and the interest rate decreases, the Quantity demanded of bonds _______
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Increases.
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Rate of return on bonds _______ and price decreases.
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Increases.
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excess bond supply means _______
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surplus
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excess bond demand means ______
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shortage
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what increases the demand for Bonds? (5 things)
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1. increased wealth (expansion)
2. increased rick of asset 3. decrease in liquidity 4. decrease in expected inflation 5. increased expected rate of return. |
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Lower price of bonds, and higher interest rates increases the ______ of bonds.
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supply
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What causes supply of bonds to shift to the right? (3)
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1. increase in expected profits from investments
2. increased expected inflation 3. increased government deficits. |
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The _______ Effect is when expected inflation and interest rates move together.
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Fisher
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