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financial markets
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markets in which funds are transferred from people who have an excess of available funds to people who have a shortage
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security
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a claim on the issuer's future income or assets
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bond
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a debt security that promises to make periodic payments for a specified period of time
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interest rate
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the cost of borrowing or the price paid for the rental of funds
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common stock
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a share of ownership in a corporation
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financial intermediaries
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institutions that borrow funds from people who have saved and in turn make loans to people who need funds
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banks
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financial institutions that accept deposits and make loans
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financial innovation
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the development of new financial products and services
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e-finance
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the ability to deliver financial services electronically
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financial crises
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major disruptions in financial markets that are characterized by sharp declines in asset prices and the failures of many financial and non-financial firms
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money, money supply
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anything that is generally accepted as payment for goods or services or in the repayment of debts
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aggregate output
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the total production of goods and services
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unemployment rate
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the percentage of the available labor force unemployed
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business cycles
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the upward and downward movement of aggregate out put produced in the economy
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monetary theory
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the theory that relates the quantity of money and monetary policy to changes in aggregate economic activity and inflation
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aggregate price level
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the average price of goods and services in an economy
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inflation
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a continual increase in the price level
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monetary policy
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the management of money and interest rates
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fiscal policy
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decisions about government spending and taxation
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budget deficit
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an excess of government expenditures with respect to tax revenues for a particular time period
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budget surplus
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arises when tax revenues exceed government expenditures
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gross domestic product
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the market value of all final goods and services produced in a country during the course of a year
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foreign exchange rate
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the price of one country's currency in terms of another's
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aggregate income
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the total income of factors of production (land, labor, and capital) from producing goods and services in the economy during the course of the year
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What function do financial intermediaries perform?
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They provide a channel for linking those who want to save with those who want to invest.
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foreign exchange market
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where the currency of one country is converted into the currency of another country
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The national debt of the U.S. is defined as
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the accumulated federal budget deficits and surpluses since the nation's beginning
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Real GDP is computed buy adjusting nominal GDP for
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changes in the price level
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A strong U.S. dollar means that U.S. goods exported abroad will cost
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more in foreign countries and foreign goods imported will cost less in the U.S.
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