Modules 22
The price, calculated as a percent borrowed, charged by lenders for the use of their savings.
What is the Interest Rate?
An asset that can easily be used to purchase goods and services.
What is money?
A tool used to analyze a business financial position by showing assets and liabilities in a single table.
What is a T-account?
Reserve Requirements, The Discount Rate, and Open-Market Operations.
What are the three shifters the money supply? / What are the three main policies used by the Fed?
The hypothetical market for the supply and demand of loanable funds.
What is the loanable funds market?
Mutual Funds, Pension Funds, Life Insurance, and Banks.
What are Financial Intermediaries?
The actual cash in the hands of the public.
What is currency in circulation?
The bank's fraction of a bank deposits that it holds as reserves.
What is the reserve ratio?
The interest rate that banks charge other banks.
What is the federal funds rate?
The profit earned on a project expressed as a percentage of its cost.
What is the rate of return?
What are the tasks of a Financial System?
Medium of Exchange, Store of Value, and Unit of Account.
What are the roles of money in an economy?
1 / rr
What is the money multiplier?
The interest rate the Fed charges on loans from the Fed itself.
What is the discount rate?
Changes in perceived business opportunities and changes in government borrowing.
What are the shifts of the demand for loanable funds?
Loans, Bonds, Stocks, and Loan-backed securities/Bank deposits.
What are financial assets?
The Present Value times the Interest Rate in decimal form + 1 to the power of n periods of interest. (PV = (1 + r)^n)
An institution that oversees and regulates the banking system and controls the monetary base.
What is a central bank?
Changes in Aggregate Price Level, Changes in Real GDP, Changes in Technology, and Changes in Institutions.
What are the main shifters of Money Demand?
Changes in private savings behavior and changes in capital inflows.
What are the shifts of the supply of loanable funds?
The most basic point that savings and investment spending are always equal.
What is the savings-investment spending identity?
The present value of current and future benefits minus the present value of current and future costs.
What is the net present value?
The amount increase in the money supply if the required reserve ratio is 5% and there is a $1000 increase in excess reserves.
What is $20000?
Interest rates on financial assets that mature a number of years in the future.
What is the long-term interest rate?
Nominal Interest Rate - Inflation Rate
What is the Real Interest Rate?