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Ch 1 Money and Banking

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Five core principles   Time, Risk, Information, Markets, and Stability  
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Time   Time has value  
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Risk   Risk requires compensation  
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Information   Information is the basis for decisions  
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Markets   Markets determine prices and allocate resources  
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Stability   Stability improves welfare  
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Six parts of the financial system   money, financial instruments, financial markets, financial institutions, government regulatory agencies, and central banks  
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Money   used to pay for purchases and to store wealth  
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Financial instruments   used to transfer resources and risk  
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Financial markets   allow people to buy and sell financial instruments  
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Financial institutions   provide access to the financial markets, collect information, and provide a variety of other services  
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Government regulatory agencies   aim to make the financial system operate safely and reliably  
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Central banks   stabilize the economy  
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Gross Domestic Product   the market value of final goods and services produced in a country during a year  
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Real GDP   separates changes in quantities from changes in the prices-uses a base-year price  
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Nominal GDP   GDP measured at current dollar prices  
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GDP deflator   Nominal GDP/Real GDP  
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Created by: sam6204
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