Occurs when many depositors withdraw the money all at once.
What is a bank run?
100
The government plan for Taxation and Spending.
What is Fiscal Policy?
100
A system of exchange where people trade one good for another.
What is barter?
100
A bank for banks, not the public.
What is a central bank?
100
Narrowly defined money supply that includes:
*Coins and paper money in circulation
*Traveler’s checks
*Conventional checking accounts
*Other checkable deposit balances
What is M1?
200
A security made up of many home mortgages.
What is MBS?
200
The interest rate the Fed charges on loans that it makes to banks.
What is the Discount rate?
200
An object in use as medium of exchange that also has substantial value in alternative uses.
What is commodity money?
200
Was established in 1914.
What is the Federal Reserve Bank?
200
M2 includes these reasonably liquid assets that are close substitutes for money:
*Bonds
*Treasury Bills
*Certificate of Deposit
What is Near Money?
300
Asset bubbles, subprime mortgages, mortgage-backed securities, and leverage.
What were some of the causes of the Great Recession?
300
The Fed’s purchase or sale of government securities (Treasury bills).
What are Open Market operations?
300
This is decreed as money by government but has little value as a commodity.
What is Fiat money?
300
Is made up of 12 regional central banks that are located around the country, the most influential one being in New York.
What is the Fed?
300
With this system, bankers keep only a fraction of deposits on reserve.
What is Fractional Reserve Banking?
400
Typically 10-to-1 or 12-to-1 in normal times, during the housing bubble it was 30-to-1 or 40-to-1.
What is Leverage?
400
This is done by buying T-bills and reducing the money supply.
How does the Fed raise interest rates?
400
A standard object used in exchanging goods and services.
What is a medium of exchange?
400
This organization decides short-term interest rates and the size of the U.S. money supply.
What is the FOMC?
400
Guarantees that depositors will not lose money even if their bank goes bankrupt.
What is the FDIC?
500
Purchase riskier securities - higher interest rates
Higher demand for assets:
*“Junk” bonds, emerging-market debt, MBS
*Higher prices for these assets
*Smaller yields
*Smaller interest rate spreads
What is "Reach for Yield?"
500
Interest rates that banks pay and receive when they borrow reserves from one another.
What is the Federal Funds rate?
500
A standard unit for quoting prices.
What is a Unit of Account?
500
Proponents for this cite historical evidence of lower inflation, but opponents believe it is undemocratic.
What is Central Bank independance?
500
An accounting statement that shows the values of all assets on the left and the values of all liabilities and net worth on the right.