Economics: Topic 10.5, Year 2 Definitions

This is the second part of a revision quiz for A-Level Economics, Topic 10, Year 2. This topic is on: Financial markets and monetary policy.
Quiz by Laurence
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Last updated: September 21, 2020
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First submittedSeptember 21, 2020
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Definitions
Answer
Responsible for managing the monetary system in an economy.
A Central Bank
Refers to actions taken by the government to manipulate interest rates, the supply of money, and the exchange rate to achieve its macroeconomic objectives.
Monetary Policy
A group of nine experts in monetary issues who meet monthly to make a decision of the UK's bank rate.
The Monetary Policy Committee (MPC)
An organisation with 188 member countries that aims to encourage global monetary cooperation, secure financial stability and promote international trade.
The International Monetary Fund
Actions undertaken by central banks to provide or withdraw liquidity from one or more commercial banks.
Open Market Operations
Comprises the banknotes in circulation along with the balances or reserves held by commercial bank and building societies at the Bank of England.
Central Bank Money
Debt issued by the Bank of England on behalf of the UK government. These normally receive a fixed interest payment and have a lifespan in excess of one year.
Government Bonds
A sale and repurchase transaction of a financial asset between one or more commercial banks and the Bank of England.
A Repo
A form of monetary policy where a central bank creates new money electronically to buy financial assets.
Quantitative Easing (QE)
The process through which the Bank of England intervenes to manage the failure of a financial institution.
Resolution
The organisation responsible for the regulation and supervision of financial institutions in the UK.
The Prudential Regulation Authority
Operates to mitigate systemic risk.
Macroprudential Regulation
The finance raised through issuing shares and retaining earnings from previous trading periods.
Capital
The creation and sale of financial products, such as bonds, backed by the income generated by an asset, such as mortgages or car loans.
Securitisation
Exists whenever either the seller or buyer of a product has more information than the other party to the transaction.
Asymmetric Information
Comprises a bank's common equity and its disclosed retained profit.
Core Tier One Capital
The amount of profit kept by the bank and not paid out to shareholders in the form of dividends.
Retained Profit
A financial institution whose distress or failure would cause significant disruption to the international financial system and global economic activity.
A Global Systemically Important Bank (G-SIB)
Exists when one person or organisation takes greater risks because third parties carry the burden of those risks.
Moral Hazard
Refers to that part of the economy concerned with producing goods and services.
The Real Economy
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