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Macro Chapter 9

TermDefinition
loanable funds market the market where savers supply funds for loans to borrowers
interest rate a price of loanable funds, quoted as a percentage of the original loan amount; the price a borrower pays to a lender to use the lender's money
real interest rate the interest rate that is corrected for inflation
nominal interest rate the interest rate before it is corrected for inflation
Fisher equation equation stating that the real interest rate equals the nominal interest rate minus the inflation rate
time preferences the fact that people prefer to receive goods and services sooner rather than later
consumption smoothing behavior occurring when people borrow and save to smooth consumption
dissaving withdrawing funds from previously accumulated savings
savings rate personal saving as a portion of disposable (after-tax) income
investor confidence a measure of what firms expect for future economic activity
Created by: v.virgil
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