ch 16 Macroeconomics
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Transactions demand for money
The stock of money people hold to pay averyday predictable expenses
Precautionary demand for money
The stock of money people hold to pay unpredictable expenses.
Speculative demand for money
The stock of money people hold to take advantage of expected future changes in the price of bonds, stocks, or other non-money financial assets.
Demand for money curve
A curve representing the quantity of money that people hold at different possible rates,ceteris paribus.
The theory that changes in the money supply directly determine changes in prices, real GDP, and employment.
Equation of exchange
An accounting identity that states the money supply times the velocity of money equals total spending
Velocity of Money
The avegare # of times per year a dollar of the money supply is spent on final goods and services.
Quantity theory of money
The theory that changes in the money supply are directly ralated to changes in the price level.
Subprime mortage loan
A home loan made to barrowers with an above-average risk of default.
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