Money & Banking Chpt.1

34 terms by matthewcst

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Miskin 9th. Edition

Financial Markets

Markets in which funds are transferred from people who have an excess of available funds to people who have a shortage.

Security

A claim on the issuer's future income or assets.

Assets

Any financial claim or piece of property that is subject to ownership.

Bond

A debt security that promises to make payments periodically for a specified period of time. It is where interest rates are determined.

Interest Rate

The cost of borrowing or the price paid or the rental of funds.

Common Stock

Represents a share of ownership in a corporation.

Financial Intermediaries

Institutions that borrow funds from people who have saved and in turn make loans to others.

Financial Crisis

Major disruptions in financial markets that are characterized by sharp declines in asset prices and the failures of many financial and nonfinancial firms.

Banks

Financial institutions that accept deposits and make loans.

e-finance

Delivery of financial services electronically.

Money Supply

Anything that is generally accepted in payment for goods or services or in the repayment of debts.

Aggregate Output

Total production of goods and services.

Unemployment Rate

The percentage of the available labor force unemployed.

Business Cycles

The upward and downward movement of aggregate output produced in the economy.

Recession

Periods of declining aggregate output.

Monetary Theory

The theory that relates changes in the quantity of money to changes in aggregate economic activity and the price level.

Aggregate Price Level

The average price of goods and services in an economy.

Inflation

A continual increase in the price level.

Inflation Rate

The rate of change of the price level.

Monetary Policy

The management of money and interest rates.

Central Bank

The organization responsible for the conduct of a nation's monetary policy.

Federal Reserve System

The United States' central bank.

Fiscal Policy

Decisions about government spending and taxation.

Budget Deficit

The excess of government expenditures over tax revenues for a particular time period.

Budget Surplus

Arises when tax revenues exceed government expenditures.

Gross Domestic Product

A measure of aggregate output.

Foreign Exchange Market

Where the conversion of currency takes place.

Foreign Exchange Rate

The price of one country's currency in terms of another.

Aggregate Income

The total income of factors of production (land, labor, and capital) from producing goods and services in the economy during the course of the year.

Nominal

Measured using current prices.

Real

The values are measured in terms of fixed prices.

GDP Deflator

The nominal GDP divided by real GDP.

PCE Deflator

The nominal personal consumption expenditures (PCE) divided by the real PCE

Consumer Price Index (CPI)

Measured by pricing a basket of goods and services bought by a typical urban household.

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