Unit 2 Vocabulary

Get a hint

Actual Reserves

Click the card to flip 👆

1 / 39

Terms in this set (39)

The funds that a bank has on deposit at the Federal Reserve Bank of its district + its vault cash.

EX) If a bank has $100,000 in federal reserves and 1 million dollars in the vault, the bank's actual reserves are $1,100,000.

Asset

A resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit.

EX) Cash, accounts receivable, inventory, prepaid insurance, land, buildings, equipment, goodwill, a loan to a bank, etc.

Balance Sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

EX) A guitar shop receives its balance sheet, letting it know its current standing.

Bonds

A certificate issued by a government or private company which promises to pay back with interest the money borrowed from the buyer of the certificate. (A loan in the form of an IOU that pays interest)

EX) (Treasury bonds, high-yield bonds, mortgage-backed bonds, etc) When an investor purchases a bond, they are "loaning" that money (called the principal) to the bond issuer, which is usually raising money for some project. When the bond matures, the issuer repays the principal to the investor. In most cases, the investor will receive regular interest payments from the issuer until the bond matures.

Budget Balance

The difference between tax revenue and government spending.

EX) "The United States' budget balance is negative because we are are spending more money than we are taking in."