Ch44 Money and Banking

Front

Functions of money

Back

Medium of exchange, store of value, unit of account, standard of deferred payment.

Front

Characteristics of money

Back

Acceptable, recognisable, portable, divisible, homogeneous, limited in supply, not easy to counterfeit.

Front

What is narrow money?

Back

Notes and coins in circulation, cash held in banks, balances held by commercial banks at the central bank.

Front

What is broad money?

Back

Anything that can be reasonably converted into cash, including deposit accounts, foreign currency, and some types of securities.

Front

What does the quantity theory of money explain?

Back

How changes in the money supply affect the price level.

Front

What is the Fisher equation?

Back

MV = PT, where M is money supply, V is velocity of circulation, P is price level, and T is transactions/output.

Front

What does the bank credit multiplier show?

Back

How much additional liquid assets will enable banks to increase their liabilities.

Front

What is quantitative easing?

Back

A central bank buys government and private securities to enable banks to lend money.

Front

What does liquidity preference theory explain?

Back

The demand for money based on transactions, precautionary, and speculative motives.

Front

What is helicopter money?

Back

Money given to everyone by the government to increase aggregate demand during a recession.