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anytime I buy something hoping it'll increase in value

Stock Market

legal gambling


piece of a company

Kinds of stocks

Common and Preferred

Common Stock

Cheaper, more affordable; get small voice in company, get money last

Preferred Stock

No say in company, more experience, considered part of overhead, get paid like a bill money first


Profit from company divided among stock holders


took others money from stock/fake investments

2 ways to make money on stock

selling or dividend

Stock Market Crash

Oct. 30th, 1929

Stock Market Analyst

Do nothing but, research


person who advises us how to spend money

Security and Exchange Commission

make sure company plays fair


tells how company is doing

Coveat emptor

buyers beware


allow someone else to vote for them


small business selling locally; want to expand, put out brochures for brokers

New York Stock Exchange

Biggest stock exchange in the world U.S. National market

Dow Jones

numbers being quoted what 30 select company's done today

Standard and Poors

Select 500 company's of what they average

National Association of Security Dealers of Automated Quotes (NASDAQ)

2nd American exchange


Initial Public Offering


thumb tack of how NY is doing

Stock Split

company issues more stock while lowering price, stock gets to expensive

Price of Stock

it's due to supply and demand

During Stock Split

it's completely neutral, stock doesn't lose value even with price drop

2 types of investments

Real and financial

Real investments

create something new (the better of the 2)

Financial investments

buy something that already exist


anything accepted as payment for a debt


trading a good for another

Legal tender

many issued by government

Money's value

is affected by supply and demand


value of dollar goes down; price goes up


Value of dollar goes up; price goes down


Reached hyper inflation, up to 1000%

Consumer Price Index (CPI)

measures value of dollar

4 Parts of FED

1. Board of 7 people, purpose is long term policy, 14 year terms, the president appoints them
2. Open Market Committee, control monetary policy
3. 12 district banks separated by financial activity
4. Presidential advisory counsel, advise presidential, no power

Functions of FED

1. act as banker to U.S. government
2. act as banker to commercial bank
3. supervise commercial bank
4. control monetary policy

Reserve requirement

bank has to keep only a certain amount of money on hand

Fiscal policy

ability to tax and spend, controlled by president and congress

interest rate

amount paid to the bank to use their money

discount rate

rate FED charges a commercial bank when they make a loan tax

Federal spending

less money for the people

Chairman of Fed


Law of Diminishing returns

If I add variable to fixed productivity with increase for a time, but then fall


output worker per hour

Leading Economic Indicators

tells how well economy is functioning


1. Productivity
2. Per captia incase (average income for average person)
3. Growth National Product (GNP) value of all goods and services produced by a country anually
4. Stock market -long term trends
5. CPI

Growth Domestic Product

physically produced in the country

Unemployment rate

16 and up actively seeking

Unemployment rate for U.S.


Business cycle

what will happen in a mixed economy over an amount of time


gets smaller
employment falls
consumer and business spending is done


bad economic times
employment is low
business and consumer spending is low


getting bigger/grows
Employment goes up
Consumer and business spending goes up


extremely good economic times
Full employment <5%
Consumer and business spending extremely high


extremely bad economic times
employment is less then 70%
consumer and business spending stops

3 types of unemployment

Cyclical, Frictional, and Structural


lose job due to change in cycle


temporary change; unavoidable


due to change in local economy or change in technology; local disruption

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