No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Appendix A Definition Index 483 Middleman: a firm that transforms a good (or service) into a form closer to the consumer’s desired end state of a consumption good. (Chapter 6—The Market’s Response to Transaction Costs) Models: a simplified description of the processes a scientist wants to understand. (Chapter 1—Assumptions) Monetary base: the narrowest form of money in a fractional reserve banking system (also called high powered money), consisting of Currency (C) and Reserves (R). (Chapter 12—Mmm-M&Ms (M1, M2, M3)/Mmm-Monetary Aggregates) Monetary policy: managing the flow of money and credit in an economy (usually by targeting some interest rate) to primarily affect the private sector’s consumption and investment decisions. (Chapter 18—Introduction) Monetary sterilization: the process of ensuring monetary inflows into a country do not change domestic production. This usually occurs through the issuing of bonds to sop up, or “sterilize” the incoming money flow. (Chapter 15—Mercantilism vs. Free Trade) Money: the most marketable commodity. (Chapter 11—The Origin of Money: The Most Marketable Commodity) Money market mutual fund (MMMF): An investment vehicle whose portfolio includes highly liquid investments that can be easily sold, such as government Treasury Bills or large corporations short term debt (called commercial paper). MMMF’s offer slightly higher interest rates than a checking account, and do not officially carry a government guarantee, but offer check writing privileges. (Chapter 12—Mmm-M&Ms (M1, M2, M3)) Money multiplier: the ratio of the money supply to the monetary base. (Chapter 11— Fractional Reserve Banking Explained) Monopoly: a market structure with only one substantial provider. The monopoly firm is therefore able to determine the price of the product, while consumers determine the quantity produced (according to their demand schedule). (Chapter 8—Introduction) Multiple deposit expansion: the process of money creation, enabled by a fractional reserve banking system as new reserves are provided by the central bank. (Chapter 12— Mmm-M&Ms (M1, M2, M3)/Mmm-Monetary Aggregates) Multiplier: spending begets further spending. (Chapter 18—Introduction)