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ECON 2105: FINAL EXAM
Money |
The set of assets in an economy that people regularly use to buy goods and services from other people.
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Medium of Exchange |
an item that buyers give to sellers when they want to purchase goods and services.
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Unit of Account |
the yardstick people us to post prices and record debts.
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Store of Value |
an item that people can use to transfer purchasing power from the present to the future.
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Liquidity |
the ease with which an asset can be converted into the economy's medium of exchange.
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Commodity Money |
money that takes the form of a commodity with intrinsic value
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Fiat Money |
money without intrinsic value that is used as money because the government decree.
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Currency |
the paper bills and coins in the hands of the public
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Demand Deposits |
balances in bank accounts that depositors can access on demand by writing a check.
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Federal Reserve |
the central bank of the U.S.
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Central Bank |
an institution designed to oversee the banking system and regulate the quantity of money in the economy.
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Money Supply |
the quantity of money available in the economy.
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Monetary Policy |
the setting of the money supply by policymakers in the central bank
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Reserves |
deposits that banks have received but have not loaned out.
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Fractional-Reserve Banking |
a banking system in which banks hold only a fraction of deposits as reserves.
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Reserve Ratio |
the fraction of deposits that banks hold as reserves
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Money Multiplier |
the amount of money the banking system generates with each dollar of reserves.
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Open-Market Operations |
the puchase and sale of U.S. government bonds by the Federal Reserve.
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