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Description
Flashcards by emma.charleswort, updated more than 1 year ago
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Created by emma.charleswort
over 9 years ago
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| Question | Answer |
| What is the definition of money? | Assets that people are generally willing to accept in exchange for goods and services or for payment of debts. |
| What is the definition of an Asset? | Anything of value owned by a person or firm |
| What is the definition of Commodity money? | A good used as money that also has value independent of its use as money |
| What is flat money? | Money, such as paper currency, that is authorised by a central bank or government body and that does not have to be exchanged by the central bank for gold or some other commodity money |
| What is the Reserve Bank of Australia? | The central bank of Australia |
| What is the definition of currency? | Notes and coins held by the private non-bank sector |
| What is the definition of M1? | The narrowest definition of the money supply which is composed of currency plus the value of all demand deposits with banks |
| What are demand deposits? | Also called current deposits, these are deposits in financial institutions that are transferable by cheque, by debit cards at EFTPOS terminals and through electronic transfer between accounts. They are called demand deposits because they are available on demand, and are repayable on demand in notes and coins. |
| What is the definition of M3? | M1, plus all other deposits of the private non-bank sector with domestic and foreign-owned banks operating in Australia. |
| What is the definition of broad money? | M3, plus deposits into non-bank deposit-taking institutions minus holdings of currency and deposits of non-bank depository corporations. |
| What are reserves? | Deposits that a bank keeps as cash in its vault or on deposit with the Reserve Bank of Australia |
| What is a simple deposit multiplier? | The ratio of the amount of deposits created by banks to the amount of new reserves. |
| What is a financial system? | The system of financial markets and financial intermediates through which firms acquire funds from households. |
| What is monetary policy? | The actions taken by the Reserve Bank of Australia to manage interest rates in the pursuit of macroeconomic goals. |
| What is financial intermediaries? | Firms such as banks and non-bank financial intermediaries (NBFIs) (which include credit unions, building societies, managed funds, superannuation funds and insurance companies) that borrow funds from savers and lend them to borrowers. |
| What is a cash rate? | The interest rate on loans in the overnight money market |
| What is open market operations? | The RBA purchasing or selling financial instruments such as Commonwealth Government Securities and private bonds and securities, either by outright purchase or sale, or by the use of repurchase agreements. |
| What is repurchase agreement? | The RBA offer to buy (or sell) Commonwealth Government Securities and other eligible financial instruments, from banks or other authorised financial dealers, provided the same banks or dealers are prepared to repurchase (or resell) them at a future date, often in a few days' time, at a price agreed at the outset |
| Define divisible | Capable of being divided |
| What does RR stand for? | Reserve Ratio |
| Define shares | Share are financial securities that represent partial ownership of a firm |
| Define bonds | Bonds are financial securities that represent promises to repay a fixed amount of funds |
| What does GFC stand for | Global Financial Crisis |
| What does OMO stand for? | Open Market Operations |
| What does CGS stand for? | Commonwealth Government Securities |
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