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Unit 6, . - Coggle Diagram
Unit 6
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What are interest-bearing short-term credit instruments that money market mutual fund companies purchase using the combined funds of individual shareholders?
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In the market for money, the intersection of demand and supply determines the
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Savings and loan associations, mutual savings banks, and credit unions are known collectively and specifically as thrift institutions
Credit unions accept deposits from and lend to members, who usually are a group of people who work for the same company.
Near monies are certain highly liquid financial assets that do not function directly or fully as a medium of exchange but can be readily converted into currency
Money market mutual fund companies use the combined funds of individual investors to buy interest-bearing short-term credit instruments such as certificates of deposit and US government securities.
The debts or liabilities of commercial banks and thrift institutions are known as checkable deposits
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The government's monetary authorities attempt to provide the amount of money needed for the particular volume of business activity that will promote full employment, price stability, and economic growth.
By not backing currency, the government has the ability to provide as much or as little money as needed to maintain the value of money and to best suit the economic needs of the country.
A deposit in a commercial bank or thrift institution that earns interest and can be withdrawn by the depositor without penalty at the end of a specific period is a time deposit
The reason there is an inverse relationship between the purchasing power of the dollar and the price level is because as the price level rises, more dollars are needed to buy a particular amount of goods, services, or resources.
General acceptance of paper currency is more important than the government's decree that money is legal tender.
Price level stability necessitates intelligent management or regulation of the nation's money supply and interest rates, otherwise known as monetary policy
What is the relationship between the Board of Governors of the Federal Reserve System and the 12 Federal Reserve banks?
The Board of Governors directs the activities of the 12 Federal Reserve Banks.
12 Federal Reserve Banks implements the policy decisions related to the monetary control of the U.S. money and banking systems?
Unlike commercial banks, thrift institutions are regulated by agencies separate and apart from the Board of Governors and the Federal Reserve Banks.
If Megan writes a check on her San Francisco bank to Aaron, who deposits it in his Cleveland bank, how does the Cleveland bank collect the money represented by the check drawn against the San Francisco bank?
The Federal Reserve Bank
Removing the incentive to withdraw one's deposit before anyone else can is the purpose of deposit insurance
What happens if prices rise or real output increases?
Households will desire more money for transactions.
When interest rates rise , the public reacts by reducing its holdings of money as an asset.
When the interest rate falls, the public increases the amount of financial assets that it wants to hold as money.
An increase in the money supply will lower the equilibrium interest rate, while a decrease in the money supply will raise the equilibrium interest rate.
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How do returns on bonds work? The more you pay now for a set future amount, the lower the return percentage
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