Forms of Money
Payment instruments in the form of paper money and coins is -
Cash
The ability to ensure the purchase and sale of goods and services ---
Means of dealing
The need for cash for current transactions --
Transaction reason
The bank that organizes money emission and keeps the country's gold and currency reserves --
Central Bank
The variable that maintains balance in the money market --
Interest rate
Money held in bank accounts is --
Cashless money
The ability to measure the value of goods and services --
Value measure
The need for cash for unforeseen expenses ---
Reason for caution
The portion of deposits a bank must keep and cannot lend out
Mandatory (required) reserves
What determines the shift of the money demand curve (Md1 → Md2)?
Income level
Cash Payment instruments in the form of paper money and coins is --
Money mass
Saving for the purchase of goods and services in the future --
Savings tool
The need to hold financial assets to increase wealth in the future --
Speculative reason
Formula for the simple bank money multiplier
m = 1 / rr
What determines the shift of the money supply curve (Ms1 → Ms2)?
Money supply
A special commodity that acts as a general equivalent and performs all functions of money is -
Money
Name all three main functions of money
Means of dealing, Value measure, Savings tool
The two main factors affecting the money demand function
Real income level and interest rate
If rr = 20% and deposits are $1000, what are the excess reserves?
$800
According to Keynesian theory, what is the main factor driving money demand?
Interest rate
Cash in circulation issued by the Central Bank outside the banking system is -
M0
Which function of money allows debts to be paid off and is universally recognized as a means of payment? --
Means of dealing
According to the money demand function Md/P = kY – hR, if the interest rate (R) increases, what happens to money demand?
Money demand decreases
Formula for a bank's credit opportunities given deposits D and reserve ratio rr
K = D(1 – rr)
In Ms = C + D, what do C and D stand for?
C = Cash, D = Deposits