INDEX A A-paper, 204 ABN AMRO Group, 208 Abu Dhabi Investment Authority, 304 accommodating policy, 674 accountability, 390 391 accounting firms, 188 accounting net worth, 336n adaptive expectations, 147, 148 adjustable-rate mortgages, 259 advances, 316, 407, 412 413 adverse selection see also asymmetric information collateral, 176 177 credit risk management, 330 334 defined, 171 described, 32 33 financial intermediation, 175 176 financial structure, influence on, 171 177 financial supervision and, 231 free-rider problem, 173 and government regulation to increase information, 174 175 and government safety net, 228 lemons problem, 171 177 net worth, 176 177 private production, 173 sale of information, 173 tools to help solve problems, 173 177 adverse shocks, 549 Affected Trusts, 208 after-tax real interest rate, 78n Afxentiou, Panos, 400 agency problems, 205 206, 341 agency theory, 171 aggregate demand components of, 619 620 defined, 619 deriving the aggregate demand curve, 620 622 equation, 573 equilibrium, 627 633 aggregate demand curve, 613 616, 620 622 aggregate demand function, 577 aggregate demand shocks, 630 631 aggregate output aggregate demand, 573 aggregate demand function, 577 autonomous consumer expenditure, 580 581, 584 changes in equilibrium level of, 601 603 consumer expenditure, 573, 574 575 consumption function, 574 575, 575f defined, determinants of, 572 586 and expansionary policy, 696 697, 701 703 expenditure multiplier, 578 581 fiscal policy, response to change in, 602 603 government, role of, 581 583 government spending, 573, 581 583, 584 585, 603 international trade, role of, 583 and ISLM model, 592 593, 592f Keynesian cross diagram, 576 578 monetary policy, response to change in, 601 602 and money supply, 602 net exports, 573, 586 in new classical macroeconomic model, 696 planned investment spending, 573, 575 576, 579, 579f, 584 and price level, 620 response of, 585t taxes, 585, 603 and unemployment, 620 aggregate price level and aggregate output, 620 defined, equilibrium interest rate, changes in, 102 and exchange rates, 501 expansionary policy, response to, 701 703 expected price level, 626 fixed, 573 and the money supply, 8f unanticipated price level channel, 657 658, 662 unexpected decline, and balance sheets, 197 aggregate supply defined, 619 deriving the aggregate supply curve, 622 627 equilibrium, 627 633 aggregate supply curve, 622 627 aggregate supply shocks, 631 AIG, 209, 210, 227, 292, 375 Akerlof, George, 172n Alberta Heritage Savings Trust Fund, 304 Alberta Municipal Financing Corporation, 27 Alberta Treasury Branches, 277, 406n, 432n, 433n Alesina, Alberto, 401n alt-A mortgages, 204 American Express, 260 American International Group See AIG American options, 362 American Stock Exchange (AMEX), 301 anchor country, 540 anchor currency, 524 Ando, Albert, 649n animal spirits, 581, 671n annual percentage rate (APR), 235 annuities, 290 anti-inflation policies, 704 706 anticipated policy, 694 696, 699 appreciation, 11, 495, 497 Arab countries, and sovereign wealth funds, 304 arbitrage, 153, 231, 351 Argentina Central Bank of Argentina, 545 currency, collapse of, 221 currency board, 544, 545 financial crises in, 217 222 fiscal imbalances in, 199 foreign exchange crisis, 533 534 foreign lending to, 279, 280 Arthur Andersen, 188, 191 asset-backed commercial paper (ABCP) market, 207, 208 209 Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, 459 asset demand determinants of, 83 85 expected return, 83 liquidity, 83, 84 risk, 83 84 theory of asset demand, 84, 84t wealth, 83 asset-liability management (ALM) committee, 326 asset management, 321, 325 asset market approach, 88, 88n, 503n, 510n asset market effects, and balance sheets, 197 199 asset-price bubble, 202, 481 485 asset price channels, 654 655 asset transformation, 32 assets asset price boom and bust, 202 on bank balance sheet, 317 318 on Bank of Canada s balance sheet, 406 407 as collateral, 23 defined, demand for See asset demand of financial intermediaries, 39 plain vanilla assets, 208 portfolio, 32 real assets, 91 restrictions on asset holdings, 229 230 risky assets, 229 230 write-downs, and balance sheets, 198 asymmetric information see also adverse selection; moral hazard consumer protection, 235 credit risk management, 330 334 credit view, 652 727