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ECON 2410 (18)
Chapter 4

Chapter 4- Financial Markets.pdf

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ECON 2410
Laurent Cellarier

Chapter 4- Financial Markets January 22, 2014 2:13 PM Definitions/Equations Currency- coins and bills ▯▯ ▯▯▯ ▯ Checkable Deposits- deposits at banks and other financial institutions against which checks can be written ▯ ▯▯1▯▯▯▯ ▯ M1-the sum of currency, traveler's checks, and checkable deposits- assets that can be used directly in transactions Bond- a financial asset that promises a stream of known payments over some period of time Money Market Funds- financial institutions that receive funds from people and use them to buy short-term bonds Demand for Money- see equation below ▯ ▯ ▯$▯ ·▯ ▯▯▯ LM Relation-an equilibrium condition stating that the demand for money must be equal to the supply of money, the equilibrium condition for financial markets Open Market Operation- the purchase or sale of government bonds by the central bank for the purpose of increasing or decreasing the money supply Expansionary Open Market Operation- an open
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