Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
15 Cards in this Set
- Front
- Back
|
Financial capital
|
The funds that firms use to buy physical capital.
|
|
|
Real GDP
|
The value of final goods and services produced in a given year when valued at the prices of reference base year.
|
|
|
Nominal GDP
|
The value of final goods and services produced in a given year valued at the prices that prevailed in the same year. It is a more precise name for GDP.
|
|
|
real interest rate
|
equals nominal interest rate minus inflation rate.
|
|
|
gross investment
|
total amount spent on new capital
|
|
|
net investment
|
is gross investment minus depreciation
|
|
|
financial institution net worth
|
is the market value of what it has lent minus the market value of what it has borrowed
|
|
|
solvent
|
when net worth is positive
|
|
|
insolvent
|
when net worth is negative
|
|
|
illiquid
|
when a firm has made long term loans with borrowed funds and is faced with a sudden demand to repay more of what it has borrowed than its available cash
|
|
|
net taxes
|
taxes paid minus the cash transfers received (such as social security and unemployment benefits)
|
|
|
investment formula
|
Investments = Savings + (net taxes - government expenditures) + (Imports - exports)
|
|
|
sum of private savings/national savings
|
(net taxes - government expenditures)
|
|
|
government budget surplus
|
increases the supply of loanable funds, decreases real interest rate, which decreases household savings and decreases the quantity of private funds supplied.
|
|
|
government budget deficit
|
increases the demand for loanable funds, increases real interest rate, which increases household savings and increases the quantity of private funds supplied.
|
