Money Market

6. 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.
7. An asset that individuals acquire for the purpose of trading goods and services rather than for their own consumption.
9. Any asset that can easily be used to purchase goods and services.
10. The sum of currency in circulation and bank reserves.
11. Shows how the quantity of money supplied varies with the interest rate.
12. 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.
14. The interest rate the Fed charges on loans to banks.
15. The profit earned on the project expressed as a percentage of its cost.
17. A means of holding purchasing power over time.
18. A measure used to set prices and make economic calculations.
19. The total value of financial assets in the economy that are considered money.
20. 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).
21. The smallest fraction of deposits that the Federal Reserve allows banks to hold.
22. The fraction of bank deposits that a bank holds as reserves.

1. a purchase or sale of government debt by the Fed.
2. An institution thatoversees and regulates the banking systemand controls the monetary base.
3. This allows banks that fall short of the reserve requirement to borrow funds from banks with excess reserves.
4. An arrangement in which the Federal Reserve stands ready to lend money to banks.
5. are rules set by the Federal Reserve that determine the required reserve ratio for banks.
6. Shows the relationship between the quantity of money demanded and the interest rate.
8. 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.
13. $1 realized one year from now is equal to $1/(1 + r)
16. The currency banks hold in their vaults plus their deposits at the Federal Reserve.