Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Econ modules 22-26
Vocab set 1 for modules 22-26
| Term | Definition |
|---|---|
| interest rate | the price, calculated as a percentage of the amount borrowed, charged by lenders to borrowers for the use of their savings for one year |
| savings-investment spending identity | an accounting fact that states that savings and investment spending are always equal for the economy as a whole |
| budget surplus | the difference between tax revenue and government spending when tax revenue exceeds government spending |
| budget deficit | the difference between tax revenue and government spending when government spending exceeds tax revenue |
| budget balance | the difference between tax revenue and government spending |
| National savings | the sum of private savings and the government's budget balance; the total amount of savings generated within the economy |
| Capital Inflow | the net inflow of funds int a country; the difference between the total inflow of foreign funds to the home country and the total outflow of domestic funds to other countries |
| wealth | the value of accumulated savings |
| financial asset | a paper claim that entitles the buyer to future income from the seller |
| physical asset | a claim on a tangible object that gives the owner the right to dispose of the object as he or she wishes |
| liability | a requirement to pay income in the future |
| Transaction costs | the expenses of negotiating and executing a deal |
| Financial risk | uncertainty about future outcomes that involve financial losses and gains |
| Diversification | investment in several different assets with unrelated, or independent, risks, so that the possible losses are independent events |
| Liquid | describes an asset that can be quickly converted into cash without much loss of value |
| illiquid | describes an asset that cannot be quickly converted into cash without much loss of value |
| Loan | a lending agreement between an individual lender and an individual borrower |
| Default | when a borrower fails to make payments as specified by the bond contract |
| loan-backed security | assets created by pooling individual loans and selling shares in that pool |
| financial intermediary | an institution, such as a mutual fund, pension fund, life insurance company, or bank that transforms the funds it gathers from many individuals into financial assets |
| mutual fund | a financial intermediary that creates a stock portfolio by buying and holding shares in companies and then selling shares of this portfolio to individual investors |
| pension fund | a type of mutual fund that holds assets in order to provide retirement income to its members |
| life insurance policy | a financial intermediary that sells policies guaranteeing a payment to a policyholder's beneficiaries when the policyholder dies |
| bank deposit | a claim on a bank that obliges the bank to give the depositor his or her cash when demanded |
| bank | a financial intermediary that provides liquid assets in the form of bank deposits to lenders and uses those funds to finance the illiquid investments or investment spending needs of borrowers |
| money | any asset that can easily be used to purchase goods and services |
| currency in circulation | actual cash held by the public |
| checkable bank deposits | bank accounts on which people can write checks |
| money supply | the total value of financial assets in the economy that are considered money |
| medium of exchange | an asset that individuals acquire for the purpose of trading for goods and services rather than for their own consumption |
| store of value | an asset that is a means of holding purchasing power over time |
| unit of account | a measure used to set prices and make economic calculations |
| commodity money | a medium of exchange that is a good, normally gold or silver, that has intrinsic value in other uses |
| commodity-backed money | a medium of exchange that has no intrinsic value whose ultimate value is guaranteed by a promise that it can be converted into valuable goods on demand |
| Fiat money | a medium of exchange whose value derives entirely from its official status as a means of payment |
| monetary aggregate | an overall measure of the money supply |
| Near-moneys | a financial asset that can't be directly used as a medium of exchange but can be readily converted into cash or checkable bank deposits |
| present value | the amount of money needed at the present time to produce, at the prevailing interest rate, a given amount of money at a specified future time |
| net present value | the present value of current and future benefits minus the present value of current and future costs |
| Bank reserves | currency held by banks in their vaults plus their deposits at the Federal Reserve |
| T-account | a simple tool that summarizes a business's financial position by showing, in a single table, the business's assets and liabilities, with assets on the left and liabilities on the right |
| reserve ratio | the fraction of bank deposits that a bank holds as reserves |
| required reserve ratio | the smallest fraction of deposits that the Federal Reserve allows banks to hold |
| bank run | a phenomenon in which many of a bank's depositors try to withdraw their funds due to fears of a bank failure |
| Deposit insurance | a guarantee that a bank'g depositors will be paid even if the bank can't come up with the funds, up to a maximum amount per account |
| Reserve requirements | rules set by the Federal Reserve that set the minimum reserve ratio for banks |
| discount window | an arrangement in which the Federal Reserve stands ready to lend money to banks |
| Excess reserves | a bank's reserves over and above the reserves required by law or regulation |
| monetary base | the sum of currency in circulation and bank reserves |
| money multiplier | the ratio of the money supply to the monetary base; indicates the total number of dollars created in the banking system by each $1 addition to the monetary base |
| central bank | an institution that oversees and regulates the banking system and controls the monetary base |
| commercial bank | a bank that accepts deposits and is covered by deposit insurance |
| investment bank | a bank that trades in financial assets and is not covered by deposit insurance |
| savings and loan (thrift) | deposit-taking banks, usually specialized in issuing home loans |
| leverage | the degree to which a financial institution is financing its investments with borrowed funds |
| balance sheet effect | the reduction in a firm's net worth from falling asset prices |
| vicious cycle of deleveraging | the sequence of events that take place when a firm's asset sales to cover losses produce negative balance sheet effects on other firms and force creditors to call in their loans |
| Subprime lending | lending to home buyers who don't meet the usual criteria for borrowing |
| securitization | the pooling of loans and mortgages made by a financial institution and the sale of shares in such a pool to other investors |
Created by:
danvilece
Popular Economics sets