Term
| _____is money for predictable, everyday financial obligations. |
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Definition
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Term
| examples of transactions demand? |
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Definition
| rent, car payment, monthly bills |
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Term
| ____is money on hand to handle future needs that are unpredictable but common too. |
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Definition
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Term
| examples of precautionary demand? |
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Definition
| medical bills, accidentws, car repairs |
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Term
| ____is money necessary to satisfy investor needs in money investments...cash |
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Definition
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Term
| what are the three types of demand for money |
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Definition
| transactions, precautionary, speculative |
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Term
| If someone holds cash, what happens to their demand for money? |
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Definition
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Term
| If someone holds their money in stocks and bonds, what happens to their demand for money? |
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Definition
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Term
| ____is money that matches the money's role as a medium of exchange. |
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Definition
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Term
| what is the velocity of money? |
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Definition
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Term
| What percent of deposits are kept on reserve? |
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Definition
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Term
| How many banks are a part of the fed? |
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Definition
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Term
| The fed has ___regional banks and _____member banks. |
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Definition
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Term
| What does the federal open market committee regulate? |
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Definition
| money supply and interest rate |
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Term
| Banks create money through_____. |
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Definition
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Term
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Definition
| the price of borrowed money |
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Term
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Definition
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Term
| What is the discount rate? |
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Definition
| rate at which the fed will lend money to its member banks, not for retail |
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Term
| What is the actual discount rate |
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Definition
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Term
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Definition
| the lowest possible rate commemercial banks extend to lenders |
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Term
| What are the three monetary policy tools? |
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Definition
| discount rate managament, open market operations, reserve requirement |
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Term
| open market operations is _____. |
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Definition
| the buying and selling of US government debt |
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Term
| How does the fed create money? |
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Definition
| writing a check to someone which increases the money supply |
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Term
| What happens when the fed sells us debt? |
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Definition
| people write checks to the fed, which goes nowhere so the supply of money decreases |
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Term
| What would happen if interest rates were zero? |
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Definition
| there would be more spending |
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Term
| When is there tight money? |
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Definition
| when the discount rate is raised |
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Term
| What is the reserve requirement? |
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Definition
| the required reserves that banks must maintain in their vaults or at the FEd and not lend out to borrower or invest in treasury securities. currently about 3.5% |
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