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
FNCE5151 E.4 vocab
Exam 4 vocab
| Term | Definition |
|---|---|
| money | any asset that can be used in making purchases |
| medium of exchange | an asset used in purchasing goods and services |
| barter | the direct trade of goods or services for other goods or services |
| unit of account: | a basic measure of economic value |
| store of value | an asset that serves as a means of holding wealth |
| M1 | the sum of currency outstanding and balances held in checking accounts |
| M2 | all the assets in M1 plus some additional assets that are usable in making payments but at greater cost or inconvenience than currency or checks |
| bank reserves | cash or similar assets held by commercial banks for the purpose of meeting depositor withdrawals and payments |
| 100 percent reserve banking | a situation in which banks’ reserves equal 100 percent of their deposits |
| reserve-deposit ratio | bank reserves divided by deposits |
| fractional-reserve banking system | a banking system in which bank reserves are less than deposits so that the reserve-deposit ratio is less than 100 percent |
| Federal Reserve System (or the Fed) | the central bank of the United States |
| monetary policy | determination of the nation’s money supply |
| Board of Governors | the leadership of the Fed, consisting of seven governors appointed by the president to staggered 14-year terms |
| Federal Open Market Committee (FOMC) | the committee that makes decisions concerning monetary policy |
| open-market purchase: | the purchase of government bonds from the public by the Fed for the purpose of increasing the supply of bank reserves and the money supply |
| open-market sale | the sale by the Fed of government bonds to the public for the purpose of reducing bank reserves and the money supply |
| open-market operations | open-market purchases and open-market sales |
| banking panic: | a situation in which news or rumors of the imminent bankruptcy of one or more banks leads bank depositors to rush to withdraw their funds |
| deposit insurance | a system under which the government guarantees that depositors will not lose any money even if their bank goes bankrupt |
| velocity | a measure of the speed at which money circulates,that is, the speed at which money changes hands in transactions involving final goods and services, or, quivalently, nominal GDP divided by the stock of money. |
| velocity equation | Numerically, V = (P × Y)/M, where V is velocity, P × Y is nominal GDP, and M is the money supply whose velocity is being measured |
| quantity equation | money times velocity equals nominal GDP: M × V = P × Y |
| diminishing returns to labor | if the amount of capital and other inputs in use is held constant, then the greater the quantity of labor already employed, the less each additional worker adds to production |
| Globalization | This popular term refers to the fact that to an increasing extent, the markets for many goods and services are becoming international, rather than national or local, in scope. |
| worker mobility | the movement of workers between jobs, firms, and industries |
| skill-biased technological change | technological change that affects the marginal products of higher-skilled workers differently from those of lower-skilled workers |
| Heterogeneous | diverse in character or content |
| frictional unemployment | the short-term unemployment associated with the process of matching workers with job |
| structural unemployment | the long-term and chronic unemployment that exists even when the economy is producing at a normal rate |
| cyclical unemployment: | the extra unemployment that occurs during periods of recession |
| gross domestic product (GDP) | the market value of the final goods and services produced in a country during a given period |
| market value | the selling prices of goods and services in the open market final goods or services : goods or services consumed by the ultimate user; because they are the end products of the production process, they are counted as part of GDP |
| intermediate goods or services | goods or services used up in the production of final goods and services and therefore not counted as part of GDP |
| capital good | a long-lived good that is used in the production of other goods and services |
| value added | for any firm, the market value of its product or service minus the cost of inputs purchased from other firms |
| consumption expenditure (or consumption) | spending by households on goods and services such as food, clothing, and entertainment |
| Investment | spending by firms on final goods and services, primarily capital goods and housing |
| compound interest: | the payment of interest not only on the original deposit but on all previously accumulated interest |
| average labor productivity: | output per employed worker |
| human capital | an amalgam of factors such as education, training, experience, intelligence, energy, work habits, trustworthiness, and initiative that affects the value of a worker’s marginal product |
| physical capital: | equipment and tools (such as machines and factories) needed to produce other goods and service |
| diminishing returns to capital | if the amount of labor and other inputs employed is held constant, then the greater the amount of capital already in use, the less an additional unit of capital adds to production |
| Entrepreneurs: | people who create new economic enterprises |
Created by:
westwood15
Popular Economics sets