Money Market

2. The smallest fraction of deposits that the Federal Reserve allows banks to hold.
3. An arrangement in which the Federal Reserve stands ready to lend money to banks.
6. The currency banks hold in their vaults plus their deposits at the Federal Reserve.
9. Any asset that can easily be used to purchase goods and services.
11. The profit earned on the project expressed as a percentage of its cost.
17. The ratio of the money supply to the monetary base. It indicates the total number of dollars created in the banking system by each $1 addition to the monetary base.
20. Shows the relationship between the quantity of money demanded and the interest rate.
21. The interest rate the Fed charges on loans to banks.
22. are rules set by the Federal Reserve that determine the required reserve ratio for banks.
23. The sum of currency in circulation and bank reserves.

1. This allows banks that fall short of the reserve requirement to borrow funds from banks with excess reserves.
4. $1 realized one year from now is equal to $1/(1 + r)
5. Guarantees that a bank’s depositors will be paid even if the bank can’t come up with the funds, up to a maximum amount per account.
7. a purchase or sale of government debt by the Fed.
8. Shows how the quantity of money supplied varies with the interest rate.
10. An asset that individuals acquire for the purpose of trading goods and services rather than for their own consumption.
12. A means of holding purchasing power over time.
13. An institution thatoversees and regulates the banking systemand controls the monetary base.
14. A measure used to set prices and make economic calculations.
15. is a hypothetical market that illustrates the market outcome of the demand for funds generated by borrowers and the supply of funds provided by lenders.
16. A tool for analyzing a business’s financial position by showing, in a single table, the business’s assets (on the left) and liabilities (on the right).
18. The fraction of bank deposits that a bank holds as reserves.
19. The total value of financial assets in the economy that are considered money.