Download Sections 5 & 6 - Vocab Review

Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. financial asset; 2. New Keynesian Economics; 3. transaction costs;
4. velocity of money;
_____the ratio of nominal GDP to the money supply.
_____theory that argues that market imperfections can lead
to price stickiness for the economy as a whole
_____the expenses of negotiating and executing a deal
_____a paper claim that entitles the buyer to future income
from the seller. Loans, stocks, bonds, and bank deposits are
types of financial assets.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. financial asset; 2. New Keynesian Economics; 3. transaction costs;
4. velocity of money;
__4__the ratio of nominal GDP to the money supply.
__1__theory that argues that market imperfections can lead
to price stickiness for the economy as a whole
__3__the expenses of negotiating and executing a deal
__4__a paper claim that entitles the buyer to future income
from the seller. Loans, stocks, bonds, and bank deposits are
types of financial assets.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. physical asset; 2. New Classical Macroeconomics; 3. diversification;
4. monetarism;
_____a claim on a tangible object that gives the owner the right to
dispose of the object at he or she wishes.
_____investment in several different assets with unrelated, or
independent, risks, so that the possible losses are independent events.
_____an approach to the business cycle that returns to the traditional
view that shifts in the aggregate demand curve affect only the aggregate
price level, not aggregate output.
_____a theory of business cycles, associated primarily with Milton
Friedman, that asserts that GDP will grow steadily if the money supply
grows steadily.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. physical asset; 2. New Classical Macroeconomics; 3. diversification;
4. monetarism;
__1__a claim on a tangible object that gives the owner the right to
dispose of the object at he or she wishes.
__3__investment in several different assets with unrelated, or
independent, risks, so that the possible losses are independent events.
__2__an approach to the business cycle that returns to the traditional
view that shifts in the aggregate demand curve affect only the aggregate
price level, not aggregate output.
__4__a theory of business cycles, associated primarily with Milton
Friedman, that asserts that GDP will grow steadily if the money supply
grows steadily.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. liquid; 2. macroeconomic policy activism; 3. default; 4. long-run
Phillips Curve;
_____a graphical representation of the relationship between
unemployment and inflation after expectations of inflation have had time
to adjust to experience.
_____the use of monetary policy and fiscal policy to smooth out the
business cycle.
_____when a borrower fails to make payments as specified by the bond
contract.
_____describes an asset that can be quickly converted into cash without
much loss of value.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. liquid; 2. macroeconomic policy activism; 3. default; 4. long-run
Phillips Curve;
__4__a graphical representation of the relationship between
unemployment and inflation after expectations of inflation have had time
to adjust to experience.
__2__the use of monetary policy and fiscal policy to smooth out the
business cycle.
__3__when a borrower fails to make payments as specified by the bond
contract.
__1__describes an asset that can be quickly converted into cash without
much loss of value.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. Loan backed securities; 2. cost-push inflation; 3. mutual fund;
4. Short-run Phillips Curve;
_____assets created by pooling individual loans and selling shares in
that pool.
_____a financial intermediary that creates a stock portfolio by buying
and holding shares in companies and then selling shares of this
portfolio to individual investors.
_____inflation that is caused by a significant increase in the price of an
input with economy-wide importance.
_____a graphical representation of the negative immediate relationship
between the unemployment rate and the inflation rate.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. Loan backed securities; 2. cost-push inflation; 3. mutual fund;
4. Short-run Phillips Curve;
__1__assets created by pooling individual loans and selling shares in
that pool.
__3__a financial intermediary that creates a stock portfolio by buying
and holding shares in companies and then selling shares of this
portfolio to individual investors.
__2__inflation that is caused by a significant increase in the price of an
input with economy-wide importance.
__4__a graphical representation of the negative immediate relationship
between the unemployment rate and the inflation rate.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. money supply; 2. monetary neutrality; 3. medium of exchange;
4. inflation targeting;
_____an approach to monetary policy that requires that the central bank
try to keep the inflation rate near a predetermined target rate.
_____the concept that changes in the money supply have no real effects
on the economy in the long run and only result in a proportional change
in the price level.
_____the total value of financial assets in the economy that are
considered money.
_____an asset that individuals acquire for the purpose of trading for
goods and services rather than for their own consumption.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. money supply; 2. monetary neutrality; 3. medium of exchange;
4. inflation targeting;
__4__an approach to monetary policy that requires that the central bank
try to keep the inflation rate near a predetermined target rate.
__2__the concept that changes in the money supply have no real effects
on the economy in the long run and only result in a proportional change
in the price level.
__1__the total value of financial assets in the economy that are
considered money.
__3__an asset that individuals acquire for the purpose of trading for
goods and services rather than for their own consumption.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. fiat money; 2. contractionary monetary policy; 3. required reserve
ratio; 4. target federal funds rate;
_____a medium of exchange whose value derives entirely from its
official status as a means of payment.
_____the smallest fraction of deposits that the Federal Reserve
allows banks to hold.
_____the Federal Reserve’s desired level for the federal funds rate.
_____monetary policy that, through the raising of the interest rate
reduces aggregate demand and therefore output.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. fiat money; 2. contractionary monetary policy; 3. required reserve
ratio; 4. target federal funds rate;
__1__a medium of exchange whose value derives entirely from its
official status as a means of payment.
__3__the smallest fraction of deposits that the Federal Reserve
allows banks to hold.
__4__the Federal Reserve’s desired level for the federal funds rate.
__2__monetary policy that, through the raising of the interest rate
reduces aggregate demand and therefore output.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. Deposit insurance; 2. expansionary monetary policy; 3. reserve requirements;
4. debt-GDP ratio;
_____monetary policy that, through the lowering of the interest
rate, increases aggregate demand and therefore output.
_____government debt as a percentage of GDP, frequently used
as a measure of a government’s ability to pay its debts.
_____a guarantee that a bank’s depositors will be paid even if the
bank can’t come up with the funds, up to a maximum amount per
account.
_____rules set by the Federal Reserve that set the minimum
reserve ratio for banks.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. Deposit insurance; 2. expansionary monetary policy; 3. reserve requirements;
4. debt-GDP ratio;
__2__monetary policy that, through the lowering of the interest
rate, increases aggregate demand and therefore output.
__4__government debt as a percentage of GDP, frequently used
as a measure of a government’s ability to pay its debts.
__1__a guarantee that a bank’s depositors will be paid even if the
bank can’t come up with the funds, up to a maximum amount per
account.
__3__rules set by the Federal Reserve that set the minimum
reserve ratio for banks.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. discount window; 2. fiscal year; 3. excess reserves; 4. money
multiplier;
_____an arrangement in which the Federal Reserve stands ready
to lend money to banks.
_____the ratio of the money supply to the monetary base;
_____a bank’s reserves over and above the reserves required by
law or regulation.
_____the time period used for much of government accounting,
running from October 1 to September 30.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. discount window; 2. fiscal year; 3. excess reserves; 4. money
multiplier;
__1__an arrangement in which the Federal Reserve stands ready
to lend money to banks.
__4__the ratio of the money supply to the monetary base;
__3__a bank’s reserves over and above the reserves required by
law or regulation.
__2__the time period used for much of government accounting,
running from October 1 to September 30.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. federal funds rate; 2. leverage; 3. subprime lending; 4. securitization;
_____the degree to which a financial institution is financing its
investments with borrowed funds.
_____lending to home buyers who don’t meet the usual criteria
for borrowing.
_____the interest rate at which funds are borrowed and lent in
the federal funds market.
_____the pooling of loans and mortgages made by a financial
institution and the sale of shares in such a pool to other
investors.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. federal funds rate; 2. leverage; 3. subprime lending; 4. securitization;
__2__the degree to which a financial institution is financing its
investments with borrowed funds.
__3__lending to home buyers who don’t meet the usual criteria
for borrowing.
__1__the interest rate at which funds are borrowed and lent in
the federal funds market.
__4__the pooling of loans and mortgages made by a financial
institution and the sale of shares in such a pool to other
investors.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. crowding out; 2. discount rate; 3. loanable funds market; 4. openmarket operations;
_____a hypothetical market in which the demand for funds is generated
by borrowers and the supply of funds is provided by lenders.
_____a purchase or sale of U.S. Treasury bills by the Federal Reserve,
undertaken to change the monetary base, which in turn changes the
money supply.
_____the negative effect of budget deficits on private investment, which
occurs because government borrowing drives up interest rates.
_____the interest rate the Fed charges on loans to banks.
Test 5 – Sections 5 & 6 – Vocabulary Review
Mr.
Weiss
1. crowding out; 2. discount rate; 3. loanable funds market; 4. openmarket operations;
__3__a hypothetical market in which the demand for funds is generated
by borrowers and the supply of funds is provided by lenders.
__4__a purchase or sale of U.S. Treasury bills by the Federal Reserve,
undertaken to change the monetary base, which in turn changes the
money supply.
__1__the negative effect of budget deficits on private investment, which
occurs because government borrowing drives up interest rates.
__2__the interest rate the Fed charges on loans to banks.