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income
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money received, especially on a regular basis, for work or through investments.
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wealth
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value of accumulated assets
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assets
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any item of economic value that can be converted into cash
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liability
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a legal debt or financial obligation that must be paid back
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revenue
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incoming money from taxes or other sources
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budget deficit
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a situation in which the government spends more than it takes in
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budget surplus
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a situation in which the government takes in more than it spends
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liquid asset
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an asset that can quickly be converted into cash with little risk of loss
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illiquid aset
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asset that cannot quickly converted into cast without significant loss of value
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national debt
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the total amount of money that a country's government has borrowed, by various means.
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loans
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An agreement between a borrower and a lender, where the borrower agrees to repay money with interest over a period of time; a loan is an asset to the bank and a liability to the borrower
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bonds
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A certificate issued by a government or private company which promises to pay back with interest the money borrowed from the buyer of the certificate
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interest rate
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Percentage paid to a lender for the use of borrowed money
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stock
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A share of ownership in a corporation.
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three functions of money
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medium of exchange, unit of account, store of value
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medium of exchange
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Any item sellers generally accept and buyers generally use to pay for a good or service; money; a convenient means of exchanging goods and services without engaging in barter.
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unit of account
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a means for comparing the values of goods and services
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store of value
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something that keeps its value if it is stored rather than used
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M1 money
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the most immediate form of money. It includes currency, demand deposits, and traveler's checks.
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M2 money
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M1 money plus less immediate forms of money, such as savings accounts, money market mutual fund accounts, money market deposit accounts, repurchase agreements, and small denomination time deposits.
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fiat money
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money that has value because the government has ordered that it is an acceptable means to pay debts; our currency and coins are fiat money
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commodity money
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objects that have value in themselves and that are also used as money, such as cigarettes in prison, tobacco in colonial times
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