AP Macroeconomics Unit II

	with a lower interest rate investors move some funds overseas in search of higher returns ($ always chases the highest return) .: demand for domestic currency decreases.: domestic goods become less expensive to foreign goods.: net exports increases
	Goods, services, and foreign factor income
	when exports exceed imports (X<M)
	when imports exceed exports (X>M)
	foreign financial investment (stocks, bonds, real estate, factories, etc...) and official reserves (foreign currency holdings)
	exchange rates determined solely on the supply of and demand for the currency on the international market (affected by STRING - speculation, consumer tastes, real interest rates, net exports, & government regulations)
	exchange rates that are predetermined and set at a specific ratio to another countries currency
	when a country's currency loses value in relation to another country's currency (when either supply of this currency increases or demand for this currency decreases)
	when a country's currency gains value in relation to another country's currency (when either the supply of this currency decreases or the demand for this currency increases)
	Spending for the production and accumulation of captial and additions to inventories
	Tendency for increases in the price level to lower the real value of financial assets with fixed money value, and vice versa
	Tendency for increases in the pricel elvel to increase the demand for money, raise interest rates, and, as a result, reduce total spending and real output in the economy, and vice versa
	Money used for the purpose of buying & selling goods or services
	An asset set aside for future use
	An asset used to measure a good or service's worth
	Most narrowly defined money supply, equal to currency in the hands of the public and the checkable deposits of commercial banks
	A more broadly devined money supply, equal to M1 plus non-checkable savings accounts (including money market deposit accounts(, small time deposits (deposits of less than $100,000), and individual money market mutual fund balances
	Any deposit in a commercial bank or thrift institution against which a check may be written
	An interest-earning deposit in a commercial bank or thrift institution that the depositor can withdraw without penalty after the end of a specified period
	A legal designation of a nation's official currency (bills and coins). Payment of debts must be accepted in this monetary unit.
	Amount of moneh people want to hold fur use as a medium of exchange
	A statement of the assets, liabilities, and net worth of a firm or individual at some given time
	A reserve requirement that is less than 100% of the checkable-deposit liabilities of a commercial bank or thrift institution
	The funds that banks and thrifts must deposit with the Federal Reserve Bank (or hold as vault cash) to meet the legal reserve requirement; a fixed percentage of the bank's or thrift's checkable deposits
	The amount by which a bank's or thirft's actual reserves exceed its requred reserves; actual reserves minus required reserves
	The funds that a bank has on deposit at the Federal Reserve Bank of its district (plus its vault cash)
	The interest rates banks and other depository institutions charge one another on overnight loans mades out of the excess reserves
	The benchmark interest rate that banks use as a reference point for a wide range of loans to businesses and individuals
	The interest rate the Federal Reserve Banks charge on loans to commercial banks or thift institutions
	Interest not adjusted for inflation; expressed in current values
	Interest minus inflation; expressed in constand values
	Number of times per year that the average dollar in the money supply is spent for fianl goods and services; nominal GDP divided by the money supply