View
- Term
- Definition
- Both Sides
Study
- All (23)
Shortcut Show
Next
Prev
Flip
ECON 3120: Exam 2
RGDP Leading
|
when RGDP changes before the other variable
|
RGDP Lagging
|
when RGDP changes after the other variable
|
Loanable Funds Market
|
encompasses all of the banks, federal reserve system, and financial systems within an economy with the purpose of regulating savings, investment, and money
|
any item that is
- regularly used as a medium of exchange
- a unit of account (must be able to measure debt)
-a method of tracking wealth (meaning that it can maintain value over time)
|
Money
|
M1
|
includes cash, currency, coin, demand deposit accounts (checking), and traveler's checks
|
M2
|
includes less liquid sources like savings accounts and financials (bank money market accounts, CDs, 401ks, IRAs)
|
M3
|
includes financials over $100,000 and US deposits in foreign banks
|
Open Market Operations
|
the buying and selling of US government bonds in secondary markets (not who you directly buy bonds from)
|
Money Multiplier
|
shows how the same money is re-spent in society, thus raising money supply by more than the initial deposit
|
Crowding Out
|
occurs when borrowing by the government reduces the funds available for borrowing as investment
|
Discount Rate
|
interest rate that commercial banks can borrow from the federal reserve
|
Federal Funds Rate
|
the interest rate that banks are legally allowed to charge each other
|
Quantitative Easing
|
occurs when the Federal Reserve buys financial assets as a method to increase the money supply when the interest rate is already at or near 0 through bond market transactions
|
Quantity Theory of Money
MV=PY
|
attempts to show how effective changes of the money supply influence production and/or the inflation rate
|
Value of Money (VL=1/P)
|
the reciprocal of the price level in society
|
Fischer Effect
|
shows a one to one adjustment in the nominal interest rate when the inflation rate changes
|
Money Neutrality
|
the belief that changes in the money supply only affects nominal variables (prices, wages) and not real variables (real interest rate, RGDP)
|
Board of Governors
|
Set regulations, long and short-term objectives, and are the main conductors of monetary policy
|
Federal Open Market Committee
|
influence the interest rate through open market operations
|
District Banks
|
Their job is to provide the commercial banks with currency, enforce the banking regulations, and act as a lender of last resort (loan money out to banks)
|
Loanable Funds Market key words
|
-funds
-savings
-investment
-consumers
-firms spending
-new home mortgages
|
Money Market key words
|
Money Supply
-Fed Res, its parts and policies
-Commercial banks
-Depositors
Money Demand
-GDP components
-Population
-Government spending
|
Value Model key words
|
-prices
-price levels
-inflation, disinflation, deflation
-Money Supply
-Money Demand
|