Term
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Definition
| Just as people trade off one good for another, people can trade off the same good at two different times |
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Term
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Definition
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Term
| Low personal discount rate |
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Definition
| you don't have to be bribed much to wait to buy something |
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Term
| High personal discount rate |
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Definition
| You are impatient, you have to be bribed a lot to wait to buy something |
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Term
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Definition
| Generating earnings from previous earnings |
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Term
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Definition
| Economic items are worth more now because over time things discount |
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Term
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Definition
| The chance that an investment's actual return will be different than expected |
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Term
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Definition
| If r is the rate of growth of a variable, then the amount of time it takes for that variable to double is approximately 70/r years |
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Term
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Definition
| If you have to pay to accept a lottery |
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Term
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Definition
| If you accept a lottery for free |
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Term
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Definition
| If you are willing to pay someone to give you the lottery |
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Term
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Definition
| The amount of reward from an investment is related to the amount of risk the investor is willing to accept |
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Term
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Definition
| Increasing the number of stocks in a portfolio reduces firm-specific risk through diversification, but market risk remains |
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Term
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Definition
| Institutions through which savers can directly provide funds to borrowers |
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Term
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Definition
| Represents a claim to partial ownership, a residual claim in a company's profits |
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Term
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Definition
| The sale of stock to raise money |
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Term
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Definition
| Certificate of indebtedness that specifies obligations of the borrower of the holder to the bond |
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Term
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Definition
| Length of time until the bond matures |
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Term
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Definition
| the probability that the borrower will fail to pay some sort of the interest or principal |
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Term
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Definition
| The way in which the tax laws treat the interest on the bond |
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Term
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Definition
| Financial institutions through which savers can indirectly provide funds to borrowers |
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Term
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Definition
| Take deposits and pay depositors interest and use the deposits to make loans to people who want to borrow, creates a medium of exchange by allowing people to write checks against their deposits |
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Term
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Definition
| An institution that sells shares to the public and uses the proceeds to buy portfolios of various types of stocks, or both, allows people with small amounts of money to easily diversify |
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Term
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Definition
| The total value of all final goods and service produced within a given period of time |
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Term
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Definition
| A measure of the price level calculated as the ratio of nominal GDP to real GDP times 100 |
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Term
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Definition
| A measure that examines the weighted average of prices of a basket of consumer goods and service, such as transportation, food and medical care |
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Term
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Definition
| A measure that examines the weighted averages of prices of a basket of consumer goods and services, such as transportation, food, and medical care. |
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Term
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Definition
| The basket does not change to reflect consumer reaction to changes in relative prices |
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Term
| Commodity subsitution bias |
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Definition
| Consumer substitute toward goods that have become relatively less expensive |
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Term
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Definition
| Consumers switch away from convenience stores to lower price outlets |
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Term
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Definition
| Substitution bias, introduction of new goods, unmeasured quality changes |
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Term
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Definition
| Medium of exchange, unit of account, store of value |
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Term
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Definition
| Coincidence of wants, progressively more liquid commodities become money, scarcity, durability, portability |
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Term
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Definition
| Demand deposits, traveler's checks, other checkable deposits, and currency |
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Term
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Definition
| Savings depots, small time deposits, money markets, mutual funds, a few minor categories, and everything in <1 |
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Term
| The Federal reserve system |
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Definition
| System of the board of governors, the regional federal reserve banks, and the federal open market, committess |
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Term
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Definition
| The buying and selling of government securities in the open market system in order to expand or contract the amount of money in the banking system |
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Term
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Definition
| Requirements regarding the amount of funds that banks must hold in reserves against deposits made by their customers. |
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Term
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Definition
| The interest rate that a depository institution is charged to borrow short term funds from a Federal Reserve bank. |
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Term
| Fractional reserve banking system |
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Definition
| Banks hold a fraction of the money deposited as reserves and lend out the rest |
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Term
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Definition
| The amount of money the banking system generates with each dollar or reserves |
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Term
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Definition
| The economy's overall rise in pricing |
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Term
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Definition
| the percentage change in the price level from the previous period |
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Term
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Definition
| The economy's overall price level falls |
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Term
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Definition
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Term
| The quantity theory of money |
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Definition
| An economic theory that proposes a relationship between changes in the money supply and the long-term price of goods. Increasing the amount of money will lead to an equal percentage rise in prices |
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Term
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Definition
| An interest rate that has been adjusted to remove the effects of inflation to reflect the real cost of interest to the borrower |
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Term
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Definition
| The rate of interest prior to taking inflation into account |
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Term
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Definition
| Economic theory that states that the real interest rate equals the nominal interest rate minus the expected inflation rate. Real interest rates fall as inflation increases, and vice versa |
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Term
| balance-of-trade accounts |
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Definition
| The difference between a country's imports and it's exports, largest compnet of a country's balance of payments |
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Term
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Definition
| Imports, foreign aid, domestic spending abroad and domestic investments abroad |
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Term
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Definition
| Exports, foreign spending in the domestic economy, and foreign investment in the domestic economy |
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Term
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Definition
| If a country imports more than it exports |
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Term
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Definition
| If a country exports more than it imports |
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Term
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Definition
| Records receipts from exports of goods and service sold abroad, paymesnts for imports of goods and services from abroad, net interest income paid abroad, and net transfers paid abroad |
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Term
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Definition
| Records foreign investment in the US minus the US investment abroad |
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Term
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Definition
| An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be eqauivilent to each country's purchasing power |
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Term
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Definition
| An economic measure of output per unit of input. |
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