FCE: Terms 3
Terms in this set (63)
An amount that credit card companies can charge for the use of a credit card.
Annual Percentage Rate (APR)
Shows how much credit costs you on a yearly basis, expressed as a percentage.
anything of value that is owned
a financial institution that accepts deposits and channels the money into lending activities
the currency banks hold in their vaults plus their deposits at the Federal Reserve
Blue Chip Stocks
stocks of large, well-established corporations with a solid record of profitability
Board of Governors
the seven-member board that oversees the Federal Reserve System
a certificate of debt (usually interest-bearing or discounted) that is issued by a government or corporation in order to raise money
the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the seller
Loss from the sale of an asset. (Capital loss can result when stock is sold for a lower price than was paid for it).
Central Banking System
A nation's central bank that is established to regulate the money supply and oversee the nation's banks. In the United States the Federal Reserve is the central bank.
Certificate of Deposit (CD)
a savings alternative in which money is left on deposit for a stated period of time to earn a specific rate of return
Characteristics of Money
Durability, portability, divisibility, uniformity, limited supply, and acceptability
a security pledged for the repayment of a loan
The market for the purchase and sale of commodity (a basic product, usually, but not always, agricultural or mineral) futures, contracts for the sale and delivery of commodities at some future time.
Interest earned on both the principal amount and any interest already earned.
the accumulation of a sum of money in, say, a bank account, where the interest earned remains in the account to earn additional interest in the future
Contractionary Fiscal Policy
a decrease in government purchases, increase in net taxes, or some combination of the two aimed at reducing aggregate demand enough to return the economy to potential output without worsening inflation; fiscal policy used to close an expansionary gap
Contractionary Monetary Policy
the federal reserve's adjusting the money supply to increase interest rates to reduce inflation
An arrangement to receive cash, goods, or services now and pay for them in the future.
A plastic card used to make purchases now and pay for them later.
rating of the risk involved in lending to a specific person or business
a nonprofit financial institution that is owned by its members and organized for their benefit
occurs when a government deficit drives up the interest rate and leads to reduced investment spending
the metal or paper medium of exchange that is presently used
a bank card that automatically deducts the amount of a purchase from the checking account of the cardholder
a contraction of economic activity resulting in a decline of prices
the money in checking accounts
the rate of interest set by the Federal Reserve that member banks are charged when they borrow money through the Federal Reserve System
that part of the earnings of a corporation that is distributed to its shareholders
monetary policy resulting in lower interest rates and greater access to credit; associated with an expansion of the money supply
reserves that banks hold over and above the legal requirement
Expansionary Fiscal Policy
An increase in government spending or a reduction in taxes
Expansionary Monetary Policy
the federal reserve's increasing the money supply and decreasing interest rates to increase real GDP
Fair Credit Reporting Act
federal law giving constumers right to veiw and correct their credit information
Federal Deposit Insurance Corporation (FDIC)
A federal agency which insures bank deposits, created by the Glass-Strengall Banking Reform Act of 1933.
the central bank of the United States
A fee for borrowing money, added to a monthly credit card bill.
a government policy for dealing with the budget (especially with taxation and borrowing)
Fractional Reserve Banking System
A banking system in which banks keep less than 100 percent of deposits as reserves
Functions of Money
Medium of exchange, unit of account, store of value
Initial Public Offering (IPO)
the first time a company issues stock that may be bought by the general public
the price paid for the use of borrowed money
the percentage of a sum of money charged for its use
The additional income earned from saving or investing money, often expressed as an annual percentage of the amount invested.
assets that flow easily since they can be converted into other investments or cash without much time or difficulty
being in cash or easily convertible to cash, the ease with which an asset can be converted into the economy's medium of exchange
the setting of the money supply by policymakers in the central bank
the official currency issued by a government or national bank
Money Market Account
is a savings account in which the interest rate varies from month to month
Money Market Mutual Fund (MMMF)
interest-bearing accounts offered by investment companies, which pool depositor's funds for the purchase of short-term securties. Depositors can write checks in minimum amounts or more against their accounts
the total stock of money in the economy
a nationwide electronic system that links dealers across the nation so that they can buy and sell securities electronically
New York Stock Exchange (NYSE)
The largest securities exchange in the United States. After its 2007 merger with a large European exchange, it is formally known as NYSE Euronext.
Open Market Operations
the buying and selling of government securities to alter the supply of money
Real Interest Rates
the interest rate that is adjusted by subtracting expected changes in the price level (inflation) so that it more accurately reflects the true cost of borrowing
Reserves that a bank is legally required to hold, based on its checking account deposits
Rule of 72
The number of years it takes for a certain amount to double in value is equal to 72 divided by its annual rate of interest.
a certificate documenting the shareholder's ownership in the corporation
A system for buying and selling shares of companies
Three Cs of Credit
Tight Money Policy
monetary policy resulting in higher interest rates and restricted access to credit; associated with a contraction of the money supply
U.S. Savings Bonds
small denomination bonds that are issued by the federal government at a discounted price and grow to full value over time.