27 terms

Chapter 1

financial markets
markets in which funds are transferred from people who have an excess of available funds to people who have a shortage
security (financial instrument)
a claim on the issue's future income or assets
any financial claim or piece of property that is subject to ownership
a debt security that promises to make payments periodically for a specified period of time
interest rate
the cost of borrowing or the price paid for the rental of funds (%)
common stock
represents a share of ownership in a corporation
foreign exchange market
where the conversion of money takes place, and where the exchange rate is determined
foreign exchange rate
price of one country's currency in terms of another's
financial intermediaries
institutions that borrow funds from people who have saved and in turn make loans to others
financial institutions that accept deposits and make loans
the deliveering of financial services electronically
money/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
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 (price level)
the average price of goods and services in an economy
a continual increase in the price level
inflation rate
the rate of change of the price level, usually measured as a % change per year)
monetary policy
the management of money and interest rates
central banks (Federal Reserve System)
the organization responsible foe the conduct of a nation's monetary policy
fiscal policy
involves decisions about gov. spending and taxation
budget deficit
the excess of gov. expenditures over tax revenues for a particular time period, typically a year
budget surplus
tax revenues exceed gov. expenditures
gross domestic output (GDP)
a measure of aggregate output
aggregate income
the total income of factors of production (land, labor, and capital)