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Economics Chapters 12 & 13 Vocabulary
5/8/09
26
Economics
12th Grade
05/07/2009

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Term
automatic stabilizer
Definition
an element of fiscal policy that changes automatically as income changes
Term
crowding out
Definition
a drop in consumption or investment spending caused by government spending
Term
discretionary fiscal policy
Definition
changes in government spending and taxation that are aimed at achieving a policy goal
Term
progressive tax
Definition
a tax whose rate rises as income rises
Term
transfer payment
Definition
income or wealth taken from one person or group and given to a different person or group
Term
value-added tax (VAT)
Definition
a general sales tax collected at each stage of production
Term
composite currency
Definition
an artificial unit of account that is an average of the values of several national currencies
Term
credit
Definition
available savings that are lent to borrowers to spend
Term
currency substitution
Definition
the use of foreign money as a substitute for domestic money when the domestic economy has a high rate of inflation
Term
deposit expansion multiplier
Definition
the reciprocal of the reserve requirement
Term
Eurocurrency market or offshore banking
Definition
the market for deposits and loans generally denominated in a currency other than the currency of the country in which the transaction occurs
Term
European Currency Unit (ECU)
Definition
a unit of account formerly used by western European nations as their official reserve asset
Term
excess reserves
Definition
the cash reserves beyond those required, which can be loaned
Term
Federal Deposit Insurance Corporation (FDIC)
Definition
a federal agency that insures deposits in commercial banks
Term
fractional reserve banking system
Definition
a system in which banks keep less than 100 percent of their deposits available for withdrawal
Term
hawala
Definition
an international informal financial market used by Muslims
Term
international banking facility (IBF)
Definition
a division of a U.S. bank that is allowed to receive deposits from and make loans to nonresidents of the United States without the restrictions that apply to domestic U.S. banks
Term
international reserve asset
Definition
an asset used to settle debts between governments
Term
international reserve currency
Definition
a currency held by a government to settle international debts
Term
liquid asset
Definition
an asset that can easily be exchanged for goods and services
Term
M1 money supply
Definition
the financial assets that are the most liquid
Term
money
Definition
anything that is generally acceptable to sellers in exchange for goods and services
Term
required reserves
Definition
the cash reserves (a percentage of deposits) a bank must keep on hand or on deposit with the Federal Reserve
Term
ROSCA
Definition
a rotating savings and credit association popular in developing countries
Term
special drawing right (SDR)
Definition
"a composite currency whose value is the average of the values of the U.S. dollar, the euro, the Japanese yen, and the U.K. pound"
Term
transactions account
Definition
a checking account at a bank or other financial institution that can be drawn on to make payments
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