Money
The United States Dollar is an example of this type of money.
What is a fiat currency?
The money multiplier formula.
What is 1/rr?
The vertical money supply curve (Sm) is controlled by this quasi-government body.
What is the Federal Reserve (Central Bank)?
If interest rates are set lower than equilibrium in the loanable funds market, this would exist.
What is a shortage?
What are Assets?
Name any two phenomena that may increase or decrease the demand for money.
Answers vary.
If the legal reserve requirement is 25 percent, this would be the value of the money multiplier.
What is 4?
Decreasing Interest on Reserves is _____________ monetary policy when a(n) _____________ reserves situation exists.
What is expansionary monetary policy in ample reserves?
How easily something can be converted to cash.
What is Liquidity?
The three functions of money.
What is the store of value, unit of account, and medium of exchange?
Banks keep their excess reserves in these two places.
What in their own vaults and at the Federal Reserve?
Give two examples of contractionary monetary policies.
- Increase RR, Increase Discount Rate, Sell Bonds
In the loanable funds graph, government borrowing for budget deficits causes this.
What is an increase in demand (or a decrease in supply) of loans?
Nominal Interest Rate - Inflation?
What is The Real Interest Rate?
When a financial transaction or trade is made using a currency, That currency is acting as this.
What is a medium of exchange?
This situation arises when depositors demand so much of their money at once that the bank does not have enough money on hand to give them and so shuts down to avoid massive panic.
What is a bank run?
An increase in savings will have what impact on the supply of loanable funds?
What is increasing the supply of loanable funds?
Demanding money (or other assets) due to belief that the value will increase
What is Speculation?
The components of M2 currency.
What is All of M1 plus small time deposits and money market mutual funds.
Suppose the Federal Reserve buys $200,000 worth of securities on the open market. If the reserve requirement is 10 percent and the banks hold no excess reserves, the maximum change to the total money supply would be __________ and prices of previously issued Bonds would ___________.
What is 2 million dollars and Increase?
In Ample reserves, the curve that the Federal Reserve Shifts through its policies
What is the the Interest Rate on Reserves?(IROR)
An increase in capital inflow from Canada would impact the U.S. loanable funds market in this way.
What is increase the supply of loanable funds?
The point at which a bond will repay its full face value.