Term
|
Definition
| an item buyers give to sellers when they want to purchase g&s |
|
|
Term
|
Definition
| the yardstick people use to post prices and record debts |
|
|
Term
|
Definition
takes the form of a commodity with intrinsic value
Examples: gold coins, cigarettes in POW camps |
|
|
Term
|
Definition
money without intrinsic value, used as money because of govt decree
Example: the U.S. dollar |
|
|
Term
| money supply (or money stock): |
|
Definition
| the quantity of money available in the economy |
|
|
Term
|
Definition
| the paper bills and coins in the hands of the (non-bank) public |
|
|
Term
|
Definition
| balances in bank accounts that depositors can access on demand by writing a check |
|
|
Term
|
Definition
| currency, demand deposits, traveler’s checks, and other checkable deposits |
|
|
Term
|
Definition
| everything in M1 plus savings deposits, small time deposits, money market mutual funds, and a few minor categories |
|
|
Term
|
Definition
| an institution that oversees the banking system and regulates the money supply |
|
|
Term
|
Definition
| the setting of the money supply by policymakers in the central bank |
|
|
Term
|
Definition
| the central bank of the U.S. |
|
|
Term
|
Definition
= fraction of deposits that banks hold as reserves
= total reserves as a percentage of total deposits |
|
|
Term
|
Definition
| a simplified accounting statement that shows a bank’s assets & liabilities. |
|
|
Term
|
Definition
the amount of money the banking system generates with each dollar of reserves
*The money multiplier equals 1/R.
*In our example,
R = 10%
money multiplier = 1/R = 10
$100 of reserves creates $1000 of money |
|
|
Term
|
Definition
the resources a bank obtains by issuing equity to its owners
-Also: bank assets minus bank liabilities |
|
|
Term
|
Definition
| the use of borrowed funds to supplement existing funds for investment purposes |
|
|
Term
|
Definition
the ratio of assets to bank capital
In this example, the leverage ratio = $1000/$50 = 20 |
|
|
Term
|
Definition
| a govt regulation that specifies a minimum amount of capital, intended to ensure banks will be able to pay off depositors and debts. |
|
|
Term
|
Definition
| money multiplier × bank reserves |
|
|
Term
| Open-Market Operations (OMOs): |
|
Definition
| the purchase and sale of U.S. government bonds by the Fed. |
|
|
