4.1: Financial Assets
4.2 Real /Nominal Interest Rates
4.3 A
4.3 B
4.4 Banking & Expand money
4.5 Money Market
4.6 Monetary Policy
4.7 Loanable Funds Market
100
giving up the change to earn money through interest (by holding cash)
What is opportunity cost (of holding cash)
100
Nominal - Inflation
What is the Fisher equation (real interest rate)
100
aggregate that includes total amount of currency in circulation or on reserve by commercial banks
What is the monetary base
100
The United States' Central bank
What is the Federal Reserve
100
Reserves, Excess Reserves, and Loans are on this side of the bank balance sheet
What are assets to banks (on a bank balance sheet)
100
the Y axis in the money market
What is the nominal interest rate
100
The type of monetary policy that isuesd to correct a recessionary gap
What is expansionary monetary policy?
100
a hypothetical market for the money that is able to be borrowed including the market for bonds, stocks, and personal loans
What is the Loanable Funds Market
200
The measure of how fast an asset can be turned into cash
What is liquidity?
200
They type of loan banks make to ensure they maintain the same real rate of return
a Flexible interest loan
200
aggregate that includes demand deposits, currency in circulation, and savings accounts
What is M1
200
Minimum amount of cash that a bank MUST hold
what are reserve requirements /what is the required reserve rate
200
Demand Deposits are on this side of the bank balance sheet
What are liabilities (on a bank balance sheet)
200
the aggregate the money market refers to
What is M1
200
The type of monetary policy used to correct an expansionary gap
What is contractionary monetary policy?
200
additional education, skills, certifications, knowledge, health etc that makes you a better person (and more importantly better part of the labor force)
What is Human Capital
300
Examples include crypto, real-estate, gold/silver. and art
What are examples of least liquid assets
300
The expected real inflation rate when banks charge 5% interest on all loans and the expected inflation rate is 2%?
What is 3%?
300
Aggregate that includes money in circulation, demand deposits, savings accounts, small denomination time deposits and retail money market funds
What is M2
300
buying or selling government debt (though bonds)
what are open market operations
300
Demand Deposits / Reserves =
What is the reserve requirement (rate)
300
Include changes in the aggregate price level, changes in GDP, changes in technology, and changes in the ability and costs of using money substitutes (like credit cards)
What is/are (changes that result in) a shift in the demand for money
300
The two reasons it takes a while for the economy to respond to monetary policy changes
What are recognition lag an impact lag?
300
When the government is running a deficit and drives up interest rates. This leads to reduced investment spending.
What is Crowding Out?
400
The entity who sees a car loan as an asset
Who is the bank/lender
400
The actual rate of return when the bond with a 6% interest rate is met with 5% actual inflation rate.
What is 1% (rate of return)
400
If you move $500 from your checking account to purchase a CD, _______ is unchanged while _______ decreases.
(What is/are) M2 and M1 respectively
400
the interest rate banks pay the Federal Reserve when a bank needs liquid now so they can get a short term loan of cash on this discounted rate
what is the discount rate/window
400
This function describes the way banks create money from a single deposit
What is the money multiplier
400
An increase in credit card fees can cause MD to increase resulting in this effect.
What is the nominal interest rate rising
400
The expansionary monetary policy in a limited reserve framework as a result of less money required to be in reserves.
What is the impact of a reduction in reserve rate?
400
The leftward shift of the demand curve when people have less money and are not as inclined to take on big purchases
What is the impact of a recession (on the Loanable funds market)?
500
The relationship between interest rates and bond values
What is an inverse relationship
500
The new nominal interest rate when Vern has a fixed interest CD with a nominal interest rate of 7% with no expected inflation. If inflation is now expected to be 3%
What is 7%
500
= $210 billion
What is the monetary Base
500
(this isn't on the test but these 500 questions are usually easy for you so I had to throw this on here sorry)
The Chair of the Federal Reserve
Who is Jerome Powell
500
1/rr
What is the money multiplier formula
500
How will a change in the Demand for money due to a decrease in GDP affect the AD curve?
(this does not answer in a question--there's no better way to format this one)
Demand will decrease, causing NIR to decrease. NIR decreasing boosts interest based spending which increases the Consumption portion of the AD curve which shifts AD to the right (increase)
500
The Expansionary monetary policy that occurs in an ample reserves system.
What is a decrease in administered interest rates/ policy rate?
500
The rightward shift of the supply curve when there is more money entering the market to work with
What is the effect of positive inflow (net capital inflow on the loanable funds market)?