- Money Demand Equation
- What Is Real Money Balances
- Define Real Money Balance Theory
- Define Real Money Balance Definition
- Real Money Demand Function
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Real Money Supply
money supply expressed in base-year dollars, calculated by dividing the money supply by a price index.
Accomodating Policy
A monetary policy of matching wage and price increases with money supply increases so that the real money supply does not fall and push the economy into recession.
After-tax real rate of return
money after-tax rate of return minus the inflation rate.
Aggregate Supply
Total quantity of goods and services supplied.
Aggregate Supply Curve
Combinations of price level and income for which the labor market is in equilibrium. The short-run aggregate supply curve incorporates information and price/wage inflexibilities in the labor market, whereas the long-run aggregate supply curve does not.
approximated net realizable value at split-off allocation
a method of allocating joint cost to joint products using a
simulated net realizable value at the split-off point; approximated
value is computed as final sales price minus
incremental separate costs
At-the-money
An option is at-the-money if the strike price of the option is equal to the market price of the
underlying security. For example, if xyz stock is trading at 54, then the xyz 54 option is at-the-money.
Call money rate
Also called the broker loan rate , the interest rate that banks charge brokers to finance
margin loans to investors. The broker charges the investor the call money rate plus a service charge.
Excess Supply
A situation in which supply exceeds demand.
Exchange Rate, Real
The nominal exchange rate corrected for price level differences.
Fiat Money
Fiat money is paper currency made legal tender by law or fiat. It is not backed by gold or silver and is not necessarily redeemable in coin. This practice has had widespread use for about the last 70 years. If governments produce too much of it, there is a loss of confidence. Even so, governments print it routinely when they need it. The value of fiat money is dependent upon the performance of the economy of the country which issued it. Canada's currency falls into this category.
Floating supply
The amount of securities believed to be available for immediate purchase, that is, in the
hands of dealers and investors wanting to sell.
High-Powered Money
See money base.
Hot money
money that moves across country borders in response to interest rate differences and that moves
away when the interest rate differential disappears.
In-the-money
A put option that has a strike price higher than the underlying futures price, or a call option
with a strike price lower than the underlying futures price. For example, if the March COMEX silver futures
contract is trading at $6 an ounce, a March call with a strike price of $5.50 would be considered in-the-money
by $0.50 an ounce.
Related: put.
Interest Rate, Real
Nominal interest rate less expected inflation.
Money
Any item that serves as a medium of exchange, a store of value, and a unit of account. See medium of exchange.
Money base
Composed of currency and coins outside the banking system plus liabilities to the deposit money banks.
Money Base
Cash plus deposits of the commercial banks with the central bank.
Money center banks
Banks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.
Money Laundering
This is the process by which 'dirty money' generated by criminal activities is converted through legitimate businesses into assets that cannot be easily traced back to their illegal origins.
Money management
Related: Investment management.
Money manager
Related: Investment manager.
Money market
money markets are for borrowing and lending money for three years or less. The securities in
a money market can be U.S.government bonds, treasury bills and commercial paper from banks and
companies.
Money Market
A market that specializes in trading short-term, low-risk, very liquid
debt securities
money market
Market for short-term financial assets.
Money Market
A financial market in which short-term (maturity of less than a year) debt instruments such as bonds are traded.
Money Market
Financial market in which funds are borrowed or lent for short periods. (The money market is distinguished from the capital market, which is the market for long term funds.)
Money market demand account
An account that pays interest based on short-term interest rates.
Money market fund
A mutual fund that invests only in short term securities, such as bankers' acceptances,
commercial paper, repurchase agreements and government bills. The net asset value per share is maintained at
$1. 00. Such funds are not federally insured, although the portfolio may consist of guaranteed securities
and/or the fund may have private insurance protection.
money market fund
A type of mutual fund that invests primarily in short-term debt securities maturing in one year or less. These include treasury bills, bankers’ acceptances, commercial paper, discount notes and guaranteed investment certficates.
Money market hedge
The use of borrowing and lending transactions in foreign currencies to lock in the
home currency value of a foreign currency transaction.
Money market notes
Publicly traded issues that may be collateralized by mortgages and MBSs.
Money Multiplier
Change in the money supply per change in the money base.
money order
A guaranteed form of payment in amounts up to and including $5,000. You might request a money order in order to pay for tuition fees at a university or a college, or for a magazine subscription.
Money purchase plan
A defined benefit contribution plan in which the participant contributes some part and
the firm contributes at the same or a different rate. Also called and individual account plan.
Money Rate of Interest
See interest rate, nominal.
Money rate of return
Annual money return as a percentage of asset value.
Money supply
M1-A: Currency plus demand deposits
M1-B: M1-A plus other checkable deposits.
M2: M1-B plus overnight repos, money market funds, savings, and small (less than $100M) time deposits.
M3: M-2 plus large time deposits and term repos.
L: M-3 plus other liquid assets.
Net Realizable Value
Selling price of an asset less expenses of bringing the asset into a saleable state and expenses of the sale.
net realizable value approach
a method of accounting for by-products or scrap that requires that the net realizable value of these products be treated as a reduction in the cost of the primary products; primary product cost may be reduced by decreasing either
(1) cost of goods sold when the joint products are sold or
(2) the joint process cost allocated to the joint products
net realizable value at split-off allocation
a method of allocating joint cost to joint products that uses, as the proration base, sales value at split-off minus all costs necessary
to prepare and dispose of the products; it requires
that all joint products be salable at the split-off point
Net realizeable value
The expected revenue to be gained from the sale of an item or
service, less the costs of the sale transaction.
Neutrality of Money
The doctrine that the money supply affects only the price level, with no long-run impact on real variables.
New money
In a Treasury auction, the amount by which the par value of the securities offered exceeds that of
those maturing.
Out-of-the-money option
A call option is out-of-the-money if the strike price is greater than the market price
of the underlying security. A put option is out-of-the-money if the strike price is less than the market price of
the underlying security.
Precautionary demand (for money)
The need to meet unexpected or extraordinary contingencies with a
buffer stock of cash.
Printing Money
Sale of bonds by the government to the central bank.
Quantity Theory of Money
Theory that velocity is constant, and so a change in money supply will change nominal income by the same percentage. Formalized by the equation Mv = PQ.
Raw material supply agreement
As used in connection with project financing, an agreement to furnish a
specified amount per period of a specified raw material.
Real
Measured in base year, or constant, dollars. Contrast with nominal.
Real Actions (Earnings) Management
Money Demand Equation
Involves operational steps and not simply acceleration
or delay in the recognition of revenue or expenses. The delay or acceleration of shipment would
be an example.
Real assets
Identifiable assets, such as buildings, equipment, patents, and trademarks, as distinguished from a
financial obligation.
real assets
Assets used to produce goods and services.
Real Business Cycle Theory
Belief that business cycles arise from real shocks to the economy, such as technology advances and natural resource discoveries, and have little to do with monetary policy.
Real capital
Wealth that can be represented in financial terms, such as savings account balances, financial
securities, and real estate.
Real cash flow
A cash flow is expressed in real terms if the current, or date 0, purchasing power of the cash
flow is given.
Real Exchange Rate
Exchange rate adjusted for relative price levels.
Real exchange rates
Exchange rates that have been adjusted for the inflation differential between two countries.
Real GDP
GDP expressed in base-year dollars, calculated by dividing nominal GDP by a price index.
Real Income
Income expressed in base-year dollars, calculated by dividing nominal income by a price index.
Real interest rate
The rate of interest excluding the effect of inflation; that is, the rate that is earned in terms
of constant-purchasing-power dollars. Interest rate expressed in terms of real goods, i.e. nominal interest rate
adjusted for inflation.
Real Interest Rate
The rate of interest paid on an investment adjusted for inflation
real interest rate
Rate at which the purchasing power of an investment increases.
Real market
The bid and offer prices at which a dealer could do 'size.' Quotes in the brokers market may
reflect not the real market, but pictures painted by dealers playing trading games.
What Is Real Money Balances
real microprofit center
a center whose output has a market value
real options
Options embedded in real assets.
Real Rate of Interest
See interest rate, real.
Real time
A real time stock or bond quote is one that states a security's most recent offer to sell or bid (buy).
A delayed quote shows the same bid and ask prices 15 minutes and sometimes 20 minutes after a trade takes place.
real value of $1
Purchasing power–adjusted value of a dollar.
Real Wage
Wage expressed in base-year dollars, calculated by dividing the money wage by a price index.
Realizable Revenue A revenue transaction where assets received in exchange for goods and
services are readily convertible into known amounts of cash or claims to cash.
Realized compound yield
Yield assuming that coupon payments are invested at the going market interest
rate at the time of their receipt and rolled over until the bond matures.
Realized Gains and Losses
Increases or decreases in the fair value of an asset or a liability that
are realized through sale or settlement.
Realized return
The return that is actually earned over a given time period.
Realized Revenue
A revenue transaction where goods and services are exchanged for cash or
claims to cash.
realized value approach
a method of accounting for byproducts or scrap that does not recognize any value for these products until they are sold; the value recognized
upon sale can be treated as other revenue or other income
REIT (real estate investment trust)
real estate investment trust, which is similar to a closed-end mutual
fund. REITs invest in real estate or loans secured by real estate and issue shares in such investments.
REMIC (real estate mortgage investment conduit)
A pass-through tax entity that can hold mortgages
secured by any type of real property and issue multiple classes of ownership interests to investors in the form
of pass-through certificates, bonds, or other legal forms. A financing vehicle created under the Tax Reform
Act of 1986.
Define Real Money Balance Theory
Speculative demand (for money)
The need for cash to take advantage of investment opportunities that may arise.
Supply
An amount made available for sale, always associated with a given price.
supply-chain management
the cooperative strategic planning,
controlling, and problem solving by a company and
its vendors and customers to conduct efficient and effective
transfers of goods and services within the supply chain
Supply shock
Define Real Money Balance Definition
n event that influences production capacity and costs in an economy.
Supply-Side Economics
View that incentives to work, save, and invest play an important role in determining economic activity by affecting the supply side of the economy.
Time value of money
The idea that a dollar today is worth more than a dollar in the future, because the dollar
received today can earn interest up until the time the future dollar is received.
Transaction demand (for money)
The need to accommodate a firm's expected cash transactions.
Visible supply
New muni bond issues scheduled to come to market within the next 30 days.
Monetarist Rule
Proposal that the money supply be increased at a steady rate equal approximately to the real rate of growth of the economy. Contrast with discretionary policy.
Real Money Demand Function
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