ECON 2315 Chapter Notes - Chapter 7: Open Market Operation, Money Market, Expected Return
21 Mar 2017
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Chapter 7: the asset market, money, and prices. Unit of account: unit of account- money is the basic unit for measuring economic value, a single, uniform measure of value is convenient. Store of value: money is a way of holding wealth. Expected return: rate of increase in its value per unit of time, return on a bank account is the ir on the account, base decisions on expected returns, or best guesses about returns on assets. Risk: high risk if significant chance the actual return will be very diff from expected return, risk premium- amount by which the expected return on a risky asset exceeds the return on an otherwise comparable safe asset. Liquidity: the ease and quickness with which an asset can be exchanged for g, s, or other assets, liquidity provides flexibility to the holder of wealth, money is the most liquid.
