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Financial Institutions and Markets Ch. 2

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Crowding-Out Effect   A phrase pertaining to the government's willingness to pay more for borrowed funds than the private sector.  
Demand For Loanable Funds   A widely used phrase in financial markets pertaining to the borrowing activities of households, businesses, and governments.  
Equilibrium Interest Rate   The interest rate that equals the aggregate demand for loanable funds with the aggregate supply of loanable funds.  
Fisher Effect   The relationship between interest rates and expected inflation.  
Interest-Inelasticity   Insensitivity to interest rates.  
Loanable Funds Theory   A theory suggesting that the market interest rate is determined by the factors that control supply and demand for loanable funds.  
Nominal Interest Rate   The quoted rate of interest.  
Real Interest Rate   The difference between the nominal interest rate and the expected inflation rate.  


   


 

 

 

 

 

 
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