Shared Flashcard Set

Details

Economics Chapter 10
Economics Vocabulary
22
Economics
Undergraduate 2
12/02/2011

Additional Economics Flashcards

 


 

Cards

Term
Physical Capital
Definition

Tools, instruments, machines, buildings, and other constructions that have been Produced in the past and that are used to produce goods and services

Term
Financial Capital 
Definition
The funds that firms use to buy and operate physical capital
Term
Gross Investment
Definition
Is the total amount spent on new capital goods
Term
Net Investment
Definition

Is the change inthe quantity of Capital - equals investment minus depreciation

Net Investment = (investment) - (depreciation) 

Term
Wealth
Definition
The value of all of the things that a person owns
Term
Savings
Definition
The amount of income that is not paid in taxes or spent on consumption goods. Savings adds to wealth
Term
Markets for Financial Capital 
Definition

Loans Market

Bonds Market

Stock Market

Term
Loans Market
Definition

Businesses use short term loans to buy inventory or extend credit to customers

-Also applicable to households

Term


Stock Market

Includes:

Benefits for investors

Drawbacks For company

Definition

Claim to profits that a firm makes

Investors get: Dividend & increase in value of stock

Company Drawbacks:

Less ownership of the company

Devalue the company 

Publicly traded differently than private 

Term
Bonds Market
Definition

It is a debt for the issuer

Might be long term(decade)

or short term(months) 

Often issue bonds to get paid for sales before the buyer can pay 

Term
Market for loanable funds is based on which rate?
Definition

The interest rate

 

Term
What are causes for changes in the demand for loanable funds?
Definition

1. Expected Profit 

(more $ = demand loanable funds)

2. Objective Influences

Phase of business cycle

Technology Change

Population Growth

Term
Loanable funds are used for
Definition

Business investment

Govt budget deficit

International investment or lending

Term
Loanable funds come from
Definition

Private savings

Government Budget

International Borrowing

Term
What does a rise in the real interest rate do for the quantity of loanable funds demanded
Definition
it decreases it
Term
The real interest rate is the opportunity cost of _______ _________?
Definition
Consumption Expenditure
Term
Consumption Expenditure
Definition
Expensesincurred in consumption, as opposed to incurred in the production of G + S
Term
What does government surplus do to supply?
Definition
Increases it
Term
What does government surplus do to the real interest rate?
Definition
Because it increases supply, the real interest rate falls
Term
What does government surplus do to private savings? Investment?
Definition
Decreases it because when the interest rate falls people are more willing to invest, there for it increases investment.
Term
4 Main factors in the change of supply of loanable funds:
Definition

1.Disposable income 

2. Wealth

3. Expected Future income

4. Default risk 

(and real interest rate) 

Supporting users have an ad free experience!