The Extent to Which a Measure or Instrument Actually Measures

question 15

Short Answer

The extent to which a measure or instrument actually measures what it is theoretically supposed to measure is _______________.

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Definitions:

Inflation Rates

The percentage increase in the price level of goods and services over a period, reducing purchasing power.

Excess Reserves

Bank reserves that exceed the required minimum amount that financial institutions must hold in reserve against deposit liabilities.

Required Reserves

The minimum amount of reserves that a bank must hold as dictated by central banking regulations, typically a percentage of deposits.

Interest

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, that lenders charge borrowers for the use of their funds.