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Economics-MankiwP10
Definitions of the newest Mankiw (Special edition with financial crisis)Ch.29-30
| Question | Answer |
|---|---|
| money | the set of assets in an economy that people regularly use to buy goods and services from other people |
| medium of exchange | an item that buyers give to sellers when they want to purchase goods and services |
| unit of account | the yardstick people use to post prices and record debts |
| store of value | an item that people can use to transfer purchasing power from the present to the future |
| liquidity | the ease with which an asset can be converted into the economy's medium of exchange |
| commodity money | money that takes the form of a commodity with intrinsic value |
| fiat money | money without intrinsic value that is used as money because of government decree |
| currency | the paper banknotes and coins in the hands of the public |
| demand deposits | balances in bank accounts that depositors can access on demand by using a debit card or writing a cheque |
| central bank | an institution designed to regulate the quantity of money available in the economy |
| monetary policy | the set of actions taken by the central bank in order to affect the money supply |
| open-market operations | the purchase and sale of non-monetary assets from and to the banking sector by the central bank |
| European Central Bank (ECB) | the overall central bank of the 12 countries of the European Money Union |
| Eurosystem | the system is made up of the ECB plus the national central banks of each of the 12 countries compromising the European Monetary Union |
| Bank of England | Central bank of the United Kingdom |
| Federal Reserve (Fed) | the central bank of the united states |
| reserves | deposits that banks have received but have not loaned out |
| fractional-reserve banking | a banking system in which banks hold only a fraction of deposits as reserves |
| reserve ratio | the fraction of deposits that banks hold as reserves |
| money multiplier | the amount of money the banking system generates with each unit of reserves |
| outright open-market operations | the outright sale or purchase of non monetary assets to or from the banking sector by the central bank without a corresponding agreement to reverse the transaction at a later date |
| repurchase agreement (repo) | the sale of a non monetary-asset together with an agreement to repurchase it at a set price at a specific future date |
| money market | the market in which the commercial banks lend money to one another on a short-term basis |
| refinancing rate | the interest rate at which the European Central Bank lends on a short-term basis ti the euro area banking sector |
| repo rate | the interest rate at which the Bank of England lends on short-term basis to the UK-banking sector |
| reserve requirements | regulations on the minimum amount of reserves that a bank must hold against deposits |
| bank run | when a substantial number of depositors suspect that a bank may go bankrupt and withdraw their deposits |
| quantity theory of money | a theory asserting that the quantity of money available determines the price level and that the growth rate in the quantity of money available determines the inflation rate |
| nominal variables | variables measured in monetary units |
| real variables | variables measured in physical units |
| classical dichotomy | the theoretical separation of nominal and real variables |
| monetary neutrality | the proposition that changes in the money supply do not affect real variables |
| velocity of money | the rate at which money changes hands |
| quantity equation | the equation M(quantity of money)* V (velocity of money) = P (price of output) * Y (amount of output) |
| inflation tax | the revenue the government raises by creating money |
| Fisher effect | the one-for-one adjustment of the nominal interest rate to the inflation rate |
| shoe-leather costs | the resources wasted when inflation encourages people to reduce their money holdings |
| menue costs | the costs of changing prices |
Created by:
Medardus
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