Modules 26 - 29

The interest rate that banks charge other banks for loans, as determined in the federal funds market.

• inflation rate

• federal funds rate

• discount rate

• open market operation

The interest rate the Federal Reserve charges on loans to banks.

• unemployment rate

• federal funds rate

• discount rate

• open market operation

A purchase or sale of government debt by the Federal Reserve.

• CPI index

• open market operation

• federal funds rate

• discount rate

Shows the relationship between the quantity of money demanded and the interest rate.

• long-term interest rates

• short-term interest rates

• money demand curve (MD)

• money supply curve (MS)

Interest rates on financial assets that mature a number of years in the future.

• money supply curve (MS)

• long-term interest rates

• short-term interest rates

• money demand curve (MD)

The interest rates on financial assets that mature within a year.

• money demand curve

• short-term interest rates

• long-term interest rates

• money supply curve

Shows the relationship between the quantity of money supplied and the interest rate.

• money demand curve

• long-term interest rates

• money supply curve

• short-term interest rates

A hypothetical market that brings together those who want to lend money and those who want to borrow money.

• crowding out

• rate of return

• loanable funds market

• investment tax credit

(on a project) is the profit earned on the project expressed as a percentage of its cost.

• money supply curve

• rate of return

• loanable funds market

• crowding out

Occurs when a government deficit drives up the interest rate and leads to reduced investment spending.

• rate of return

• crowding out

• loanable funds market

• money demand curve