Shared Flashcard Set

Details

macro economics
test 3 chapter 27, 28, 29
49
Economics
Undergraduate 2
10/19/2012

Additional Economics Flashcards

 


 

Cards

Term
discounting
Definition
the process of finding present value of a future sum of money
Term
risk adverse
Definition
people dislike bad things happening to them
Term
utility
Definition
a person's subjective measure of well-being or satisfaction
Term
annuity
Definition
a regular income every year until you die
Term
adverse selection
Definition
a high-risk person is more likely to apply for insurance than a low-risk person because a high-risk person would benefit more from insurance protection
Term
moral hazard
Definition
after people buy insurance, they have less incentive to be careful about their risk behavior because insurance will cover them
Term
diversification
Definition
the reduction of risk achieved by replacing a single risk with a large number of smaller, unrelated risks
Term
standard deviation
Definition
measure risk statistic
Term
firm-specific risk
Definition
risk that affects only a single company
Term
market risk
Definition
risk that affects all companies in the stock market
Term
undervalued stock
Definition
the price is less than the value
Term
overvalued stock
Definition
the price is more than the value
Term
fairly valued stock
Definition
the price and value of stock are equal
Term
fundamental analysis
Definition
the study of company's accounting statements and future prospects to determine its value
Term
dividends
Definition
cash payments that a company makes to its shareholders
Term
efficient markets hypothesis
Definition
the theory that assets prices reflect all publicity available information about the value of an asset
Term
informational efficiency
Definition
the description of asset prices that rationally reflect all available information
Term
random walk of stock prices
Definition
the path of a variable whose changes are impossible to predict
Term
frictional unemployment
Definition
result from the process of matching workers and jobs
Term
structural unemployment
Definition
quantity labor supply exceeded quantity labor demand
Term
job search
Definition
process of matching workers with appropriate jobs
Term
sectoral shifts
Definition
changes in the composition of demand among industries or regions
Term
collective bargaining
Definition
process by which unions and firms agree on the term of employment
Term
right-to-work laws
Definition
give workers in unionized firm the right to choose whether to join a union
Term
money
Definition
set of assets in the economy that people regularly use to buy goods and services from each other
Term
medium of exchange
Definition
an item that buyers give to sellers when they purchase goods and services
Term
unit of account
Definition
yardstick people use to post prices and record debts
Term
store of value
Definition
item that people use to transfer purchasing power from the present to the future
Term
liquidity
Definition
the ease of which asset can be converted into the economy's medium of exchange, selling a house, old baseball card are less liquid
Term
commodity money
Definition
when money takes the form of commodity with intrinsic value, example: gold
Term
fiat money
Definition
money with out intrinsic, an order or decree, government put the value into the paper
Term
money stock
Definition
the quantity of money circulating in the economy
Term
currency
Definition
the paper bills and coins in the hand of the public
Term
demand deposits
Definition
balances in bank accounts that depositors can access on demand simply by writing a check or use their debit cards
Term
federal reserve
Definition
central bank of U.S
Term
central bank
Definition
institution designed to oversee the banking system and regulate the quantity of money in economy
Term
how many members are in Fed reserve and most important?
Definition
7, ben bernanke
Term
two jobs of the Fed reserve
Definition
regular banks and ensure the health of the banking system, lender of last resort - lender to those who cannot borrow anywhere else
Control the quantity of money that is made available in the economy
Term
money supply
Definition
the quantity of money available in the economy
Term
momentary policy
Definition
the setting of money supply by policymakers in the central bank
Term
open-market operation
Definition
the purchase and sale of US government bonds
Term
reserve
Definition
deposits that banks have received but have not loaned out
Term
fraction reserve banking
Definition
banking system in which banks only keep a fraction of deposits as reserve
Term
reserve ration
Definition
the fraction of deposits that banks hold as reserve
Term
money multiplier
Definition
the amount of money the banking system generates with each dollar of reserves
Term
bank capital
Definition
the resources bank owner have put into the institution
Term
leverage
Definition
the use of borrowed money to supplement existing funds for investment purpose
Term
capital requirement
Definition
a government regulation specifying a minimum amount of bank capital
Term
discount rate
Definition
the interest rate on the loans that the fed makes to banks
Supporting users have an ad free experience!