Macroeconomics
A sustained rise in the general price level.
What is inflation?
Jamaica’s institution responsible for monetary policy and financial stability.
What is the Bank of Jamaica (BOJ)?
Financial institutions that accept deposits and transform them into loans.
What are commercial banks?
Investment vehicles pooling funds into diversified portfolios of securities.
What are unit trusts?
The BOJ’s ultimate goal when controlling inflation.
What is stable prices?
The increase in GDP and living standards over time.
What is economic growth?
The fraction of deposits banks must hold and not lend out
What is the reserve ratio?
Member‑owned cooperatives where savers are also owners.
What are credit unions?
Funds that accumulate savings during working years and provide retirement income.
What are pension funds?
The condition where rising GDP supports higher employment and living standards.
What is economic growth?
The condition achieved when inflation is low and predictable.
What are stable prices?
he BOJ’s main goal when targeting inflation
What is price stability?
The main risk banks face when borrowers fail to repay loans.
What is credit risk?
The main advantage of unit trusts for small savers.
What is diversification ?
If Jamaica’s inflation rate rises faster than pension fund returns, retirees face this problem.
What is loss of purchasing power?
The trade‑off central banks face when lowering interest rates to stimulate growth.
What is the risk of higher inflation?
Selling government securities to absorb liquidity is an example of this
What are open market operations?
400: The safety net that protects small savers and prevents bank runs.
What is deposit insurance?
The challenge pension funds face when inflation rises faster than expected.
What is maintaining retirees’ purchasing power?
One type of account is insured, while the other’s value changes with market performance.
What is the difference between credit union deposits and unit trust investments?
The multiplier effect that allows banks to expand money supply beyond initial deposits.
What is the money multiplier?
The indirect channel through which lower policy rates stimulate growth.
What is reduced borrowing costs encouraging investment and consumption?
The simultaneous risk banks face when depositors withdraw suddenly and borrowers default.
What are liquidity risk and credit risk together?
The key distinction between mutual funds and banks.
What is that mutual funds pool investor money but do not accept deposits?
By keeping deposits safe and lending money, these institutions help families and businesses continue spending and investing.
How do commercial banks support the economy?