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25 Cards in this Set
- Front
- Back
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Define:
Asset |
An Asset is a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit. |
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Define:
Security |
A Security is a claim on the issuer's future income or assets |
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Define:
Bond |
A Bond is a debt security that promises to make payments periodically for a specified period of time |
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Define:
Interest Rate |
An interest rate is the cost of borrowing or the price paid for the rental of funds
(usually expressed as a percentage of the rental of £100 per year) |
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Why is the bond market important to economic activity? |
It is important to economic activity because it enables corporations and governments to borrow so they can finance their activities.
It is also important as it is where interest rates are set |
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What are Financial Markets? |
Financial Markets are markets in which securities are issued and traded among investors |
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When a Firm Issues a bond... |
It is borrowing money that it will have to repay |
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When you hold a bond... |
You are the lender who will be paid back with interest |
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Low interest rates for borrowers means...
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It is good as it costs less for them to borrow
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Low interest rates for savers means...
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It is bad as it means they earn a lower return on their savings
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High interest rates for borrowers means...
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It is bad as they must pay more to borrow money
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High interest rates for savers means...
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It is good as they earn more interest on their savings
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What do Financial Intermediaries do?
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Financial Intermediaries help channel funds from those who do not have a productive use for them, to those who do (profit)
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When money gets channeled from savers to the borrowers....
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This promotes economic efficiency as it is an efficient allocation of resources and an increased well being for society as a whole in the long run
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Define:
Money |
Money is anything that is generally accepted inpayment for goods/services or in the repayment of debts
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Define:
Common Stock (typically just called a stock) |
A common stock represents a share of ownership in a corporation. It is a security that is a claim on the earnings and assets of the corporation.
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A security is a liability for the agent that...
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Issues it
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A security is an asset for the agent that...
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Buys it
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What is the Aggregate Price Level?
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The Aggregate Price Level is the average price of goods and services in the economy
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What is the Aggregate Demand?
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The Aggregate Demand is the total demand for final goods and services in the economy at a given time
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What is the Aggregate Supply?
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The Aggregate Supply is the total volume of goods and services produced in the economy at a given time
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What is GDP?
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GDP is the measure of the total economic output of the goods and services in a country.
Another definition: |
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What is the equation for GDP?
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GDP = C + G + I + NX
C = Consumption G= Government Spending I = Investments NX = Net Exports (Exports - Imports) |
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What is the difference between Real and Nominal values?
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Real values are adjusted for inflation, and nominal values are not. This would make nominal values appear higher.
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What is the Money Supply?
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The Money Supply is the total stock of money available in an economy at a point in time.
- Notes and coins - Money in a current account in the bank - Money in a savings account - Money in a building society |
