Macroeconomics - Ch 14 Flashcards Preview

Pre-Pharm > Macroeconomics - Ch 14 > Flashcards

Flashcards in Macroeconomics - Ch 14 Deck (28)
Loading flashcards...
1
Q

Medium of exchange

A

money; usable for buying and selling goods and services

2
Q

Unit of account

A

yardstick for measuring the relative worth of a wide variety of goods, services, and resources

3
Q

Store of value

A

enables people to transfer purchasing power from the present to the future

4
Q

liquidity

A

ease with which an asset can be converted quickly into the most widely accepted and easily spent forms of money, cash, with little or no loss of purchasing power

5
Q

M1

A

narrowest definition of the US money supply; consists of currency (coins and paper money) in the hands of the public & all checkable deposits (all deposits in commercial banks and “thrift” or savings institutions on which checks of any size can be drawn)

6
Q

Federal Reserve Notes

A

paper money issued by the Federal Reserve Banks

7
Q

Token money

A

face value of any piece of currency is unrelated to its intrinsic value - the value of the physical material (metal or paper/ink) out of which that piece of currency is constructed

8
Q

Checkable deposits

A

large component of M1 money supply (49%); any deposit in a commercial bank or thrift institution against which a check may be written

9
Q

Commercial banks

A

primary depository institutions; accept deposits of households/businesses, keep the money safe until it is demanded via checks, and use it to make available a wide variety of loans

10
Q

Savings/Thrift Institutions

A

Savings/Loan Associations, mutual savings banks, credit unions; S&L’s and mutual savings banks accept deposits of households and businesses, then use the funds to finance housing mortgages and to provide other loans; credit unions accept deposits from and loan to “members”, who usually are a group of people who work for the same company

11
Q

Near-monies

A

certain highly liquid financial assets that do not function directly or fully as a medium of exchange but can be readily converted into currency or checkable deposits

12
Q

M2

A

M1 + noncheckable savings accounts (including money market deposit accounts), small time deposits (deposits of less than $100,000), and individual money market mutual fund balances

13
Q

Savings account

A

deposit in a commercial bank or thrift institution on which interest payments are received; generally used for saving rather than daily transactions; a component of the M2 money supply

14
Q

Money market deposit account (MMDA)

A

interest-bearing account containing a variety of interest-bearing short-term securities; has a minimum balance requirement and a limit on how often a person can withdraw funds

15
Q

Time deposits

A

deposits that become available at their maturity

16
Q

Money market mutual fund (MMMF)

A

interest-bearing accounts offered by investment companies, which pool depositors’ funds for the purchase of short-term securities; depositors can write checks in minimum amounts or more against their accounts

17
Q

Legal tender

A

a nation’s official currency (bills and coins); payment of debts must be accepted in this monetary unit, but creditors can specify the form of payment, for example “cash only” or “check or credit card only”

18
Q

Federal Reserve System

A

US monetary authorities; AKA “the Fed”

19
Q

Board of Governors

A

central authority of the US money and banking system is the BOG of the Federal Reserve System

20
Q

Federal Reserve Banks

A

12; blend private and public control; collectively serve as the nation’s central bank; also serves as bankers’ banks

21
Q

Federal Open Market Committee (FOMC)

A

aids the Board of Governors in conducting monetary policy; made up of 12 people (7 members of the Board of Governors, president of the NY Federal Reserve Bank, 4 of the remaining presidents of Federal Reserve Banks on a 1-year rotating basis)

22
Q

Subprime mortgage loans

A

high-interest-rate loans to home buyers with higher-than-average credit risk

23
Q

Mortgage-backed securities

A

bonds backed by mortgage payments

24
Q

Securitization

A

process of slicing up and bundling groups of loans, mortgages, corporate bonds, or other financial debts into distinct new securities

25
Q

Troubled Asset Relief Program (TARP)

A

allocated $700 billion to the US treasury to make emergency loans to critical financial and other US firms in 2008 (“bailout money”)

26
Q

Moral hazard

A

tendency for financial investors and financial services firms to take on greater risks because they assume they are at least partially insured against losses

27
Q

Financial Services Industry

A

commercial banks, thrifts, insurance companies, mutual fund companies, pension funds, security firms, and investment banks

28
Q

Wall Street Reform and Consumer Protection Act

A

2010 law including provisions that eliminate the Office of Thrift Supervision and give broader authority to the Federal Reserve to regulate all large financial institutions, create a Financial Stability Oversight Council to be on the lookout for risks to the financial system, establish a process for the federal gov’t to liquidate (sell off) assets of large failing financial institutions, much like the FDIC does with failing banks, provide federal regulatory oversight of mortgage-backed securities and other derivatives and require that they be traded on public exchanges, require companies selling asset-based securities to retain a portion of those securities so the sellers share part of the risk, & establish a stronger consumer financial protection role for the Fed through the creation of the Bureau of Consumer Financial Protection

Decks in Pre-Pharm Class (182):