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34 terms

Money & Banking Chpt.1

Miskin 9th. Edition
STUDY
PLAY
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.