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24 Cards in this Set

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financial markets
funds are transferred from people who have an excess of available funds to those who have a shortage; include bond and stock markets
security
claim on issuer's future income or assets
bond
debt security that promises to make payments periodically for a specified period of time
interest rate
cost of borrowing/price paid for the rental of funds
5 parts of the financial system:
-money
-financial instruments (used to transfer wealth or risk)
-financial markets (buy and sell/transfer funds)
-financial institutions (services, access and info)
-central bank (monitor and stabilize economy, monitor fin. institutions)
common stock
share of ownership in a corporation. security that is a claim on earnings and assets
foreign exchange market
where conversion of currencies takes place; det. foreign exchange rate
foreign exchange rate
price of one country's currency in terms of another
financial intermediaries
institutions that borrow funds from people who have saved and make loans to other people
banks
institutions that accept deposits and make loans
other financial institutions
insurance and finance companies, pension funds, mutual funds, investment banks
money supply
anything that is gen. accepted in pmt for g/s or in repmt of debts
aggregate output
total production of g/s
business cycle
up (expansion)/down (recessions) movement of aggregate output produced in the economy
monetary theory
relates changes in quantity of $ to changes in aggregate economic activity and price level
aggregate price level
average price of g/s in an economy
inflation
continual increase in P, affects individuals, businesses, and govt.
inflation rate
rate of change of P, usually measured as a % change per year
monetary policy
mgmt of money and interest rates
central bank
FED
fiscal policy
decisions about govt spending and taxation
budget deficit
excess of govt expenditures over tax revenues for a particular pd, typically a year
financed by borrowing
budget surplus
tax revenues exceed govt expenditures
gross domestic product
measure of aggregate output