Ch 26 & 29

Question 1

The group of institutions in the economy that help to match one person’s saving with another persons investment

Answer 1

Financial system

Question 2

Financial institutions through which savers can directly provide funds to borrowers

Answer 2

Financial markets

Question 3

A certificate of indebtedness

Answer 3

Bond

Question 4

A claim to a Patrick ownership in a firm

Answer 4

Stock

Question 5

Financial institutions though which savers can indirectly provide funds to borrowers

Answer 5

Financial intermediaries

Question 6

And institution that sells shares to the public and uses the proceeds to buy a portfolio of stocks and bonds

Answer 6

Mutual fund

Question 7

The total income in the economy that remains after paying for consumption and government purchases

Answer 7

National saving

Question 8

The income that households have left after paying for taxes and consumption

Answer 8

Private saving

Question 9

The tax revenue that the government has left after their paying for its spending

Answer 9

Public savings

Question 10

The excess of tax revenue over government spending

Answer 10

Budget surplus

Question 11

The shortfall of tax revenue from government spending

Answer 11

Budget deficit

Question 12

The market in which those who want to save supply funds and those who borrow to invest demand funds

Answer 12

Market for loanable funds

Question 13

A decrease in investment that results from government borrowing

Answer 13

Crowding out

Question 14

The set of assets in an economy that people regularly use to buy goods and devices from other people

Answer 14

Money

Question 15

An item that buyers give to sellers when they want to purchase goods and services

Answer 15

Medium of exchange

Question 16

The yardstick people use to post prices and record debts

Answer 16

Unit of account

Question 17

An item that people can use to transfer purchases power from the present to the future

Answer 17

Store of value

Question 18

The ease with which an asset can be converted into the economy’s medium of exchange

Answer 18

Liquidity

Question 19

Money that takes the form of commodity with intrinsic value

Answer 19

Commodity money

Question 20

Money without intrinsic value that is used as money because of government decrease

Answer 20

Fiat money

Question 21

The paper bills and coins in the hands of the public

Answer 21

Currency

Question 22

Balances in bank accounts that depositors can access on demand by writing a check

Answer 22

Demand deposits

Question 23

The central bank of the United States

Answer 23

Federal reserve (Fed)

Question 24

An institution designed to oversee the banking system and regulate the quantity of money in the economy

Answer 24

Central bank

Question 25

The quantity of money available in the economy

Answer 25

Money supply

Question 26

The setting of the money supply by policy makers in the central bank

Answer 26

Monetary policy

Question 27

Deposits that banks have received but have not loaded out

Answer 27

Reserves

Question 28

A banking system in which banks hold only a fraction of deposits as reserves

Answer 28

Fractional-reserve banking

Question 29

The fraction of deposits that banks hold as reserves

Answer 29

Reserve ratio

Question 30

The amount of money the banking system generates with each dollar of reserves

Answer 30

Money multiplier

Question 31

The purchase and sale of US government bonds by the Fed

Answer 31

Open-market operations

Question 32

Regulations on the minimum amount of reserves that banks must hold against deposits

Answer 32

Reserve requirements

Question 33

The interest rate on the loans that the Fed makes to banks

Answer 33

Discount rate

Question 34

The interest rate at which banks make overnight loans to one another

Answer 34

Federal funds rate