Chapter 3

Chapter 3

  • Submitted By: Aminperacha
  • Date Submitted: 09/19/2013 5:50 PM
  • Category: Business
  • Words: 265
  • Page: 2
  • Views: 219

Liquid assets held by banks and Individuals. Money supply
Interest rate that the fed charges for loans to member banks. Discount rates
Currency based on some item of value, such as gold or precious stones. Commodity money
Tools used to estimate the size of money supply. Aggregate measures
Interest rate banks charge their best and most reliable customers. Prime rate
Cash on hand, deposits due from banks, and percentage required by the Federal Reserve System. Primary reserve
Phenomenon that creates new deposits from lending. Multiplier effect
Interest charged for short-term, interbank loans. Federal funds rate
Practice of reserving only part of a deposited quantity. Fractional reserve system
Money deemed legal tender by the government, but not based on or convertible into a commodity. Fiat money
Measure of how quickly things may be converted to something of value like cash. Liquidity

Review concept

What are the components of money supply?
The concept of money supply
Expanding the money supply
Measuring the money
Identify and define two types of money.
Commodity money: based on some items of value like gold
Fiat money: money that is deemed legal tender by the government, and is not based on or convertible in to a commodity.
List four measures of money supply and define them.
List and define 3 types of bank reserves.
Primary reserves- cash on hand, deposits due from other banks, and percentage either held in the vault or on deposits at the district reserve banks
Secondary- security purchased from the feds
Excess reserve- reserves held beyond a banks requirement, these excess

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