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28 Cards in this Set
- Front
- Back
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a capital investment that is owned and operated by a foreign entity.
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Foreign Direct Investment
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an investment that is financed with foreign money but operated by domestic residents.
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Foreign Portfolio Investment
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Emigration of highly educated workers to other countries
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the Brain Drain
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People’s ability to exercise authority over the resources they own
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Property Rights
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attempt to increase productivity and living standards within the country by avoiding interaction with the rest of the world. (Infant-Industry Argument)
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Inward-oriented policies
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international trade in goods and services can improve the economic well being of a country’s citizens.
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Outward-oriented policies
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exclusive right to produce a product for a number of years
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Patent System
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the group of institutions in the economy that helps to match one persons saving with another persons investment
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Financial System
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financial institutions through which savers can directly provide funds to borrowers. (such as the bond market and stock market)
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Financial Market
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a certificate of indebtedness. (specifies the obligations of the borrower to the holder of the bond – an IOU)
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Bond
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It states when the loan will be repaid
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date of maturity
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Buyer of the bond gives money in exchange for interest and eventual repayment
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the principal
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the length of time until the bond matures
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Term
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the probability that the borrower will fail to pay some of the interest or principal. (Such a failure is known as a default)
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Credit Risk
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the way the tax laws treat the interest earned on the bond. Most bonds are taxable.
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Tax Treatment
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A sale of stock to raise money
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equity finance
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the sale of bonds to raise money
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debt finance
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monitors the overall level of stock prices
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Stock Index
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Financial institutions through which savers can indirectly provide funds to borrowers
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Financial Intermediaries
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an institution that sells shares to the public and uses the proceeds to buy a portfolio of stocks and bonds
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Mutual Fund
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the total income in the economy that remains after paying for consumption and government purchases
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National saving (saving)
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the income that households have left after paying for taxes and consumptions
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Private saving
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the tax revenue that the government has left after paying for its spending
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Public saving
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an excess of tax revenue over government spending
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Budget Surplus
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a shortfall of tax revenue from government spending
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Budget deficit
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the market in which those who want to save supply funds and those who want to borrow in invest demand funds
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Market for loanable funds
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a decrease in investment that results from government borrowing
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Crowding out
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Whenever the price of an asset rises above what appears to be its fundamental value
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speculative bubble
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