is the tools, instruments, machines, buildings, and other constructions that have been produced in the past and that are used to produce goods and services.
is the funds that firms use to buy and operate physical capital.
the total amount spent on new capital goods.
the change in the quantity of capital—equals gross investment minus depreciation.
The value of all things a person owns
the amount of income that is not paid in taxes or spent on consumption goods and services; saving adds to wealth.
a promise to pay specified sums of money on specified dates; it is a debt for the issuer.
a financial market in which bonds issued by firms and governments are traded.
a certificate of ownership and claim to the profits that a firm makes.
a financial market in which shares of companies' stocks are traded.
the total market value of what it has lent minus the market value of what it has borrowed.
The Demand for Loanable Funds
the relationship between the quantity of investment demanded and the real interest rate, other things remaining the same.
The Supply of Loanable Funds
the relationship between the quantity of loanable funds supplied and the real interest rate when all other influences on lending plans remain the same.
the income earned minus net taxes. Other things remaining the same,
The Crowding-Out Effect
The tendency for a government budget deficit to raise the real interest rate and decrease investment
The Ricardo-Barro Effect
The proposition that a government budget deficit has no effect on the real interest rate or investment.