Term
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Definition
| a set of official government statistics on aggregate economic activity |
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Term
| Gross Domestic Product (GDP) |
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Definition
| 1. a measure of the value of total output of goods and services produced within a country; 2. the value at current market prices of all final goods and services produced annually in a given country |
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Term
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Definition
| goods and services sold to or ready for sale to parties that will use them for consumption, investment, government purchases, or exports |
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Term
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Definition
| goods and services that firms buy for use as inputs in producing other goods and services |
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Term
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Definition
| the dollar value of an industry's sales less the value of intermediate goods purchased for use in production |
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Term
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Definition
| the total income earned by a country's residents, including wages, rents, interest payments, and profits |
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Term
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Definition
| the total income of all types, including wages, rents, interest payments, and profits, earned by factors of production used in producing domestic product |
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Term
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Definition
| the value of a country's merchandise exports minus the value of its merchandise imports |
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Term
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Definition
| the value of a country's export of goods and services minus the value of its imports of goods and services plus its net transfer receipts from foreign sources |
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Term
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Definition
| purchases of domestic assets by foreign buyers and borrowing from foreign lenders, also often called capital inflows |
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Term
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Definition
| purchases of foreign assets by domestic residents or loans by domestic lenders to foreign borrowers, also often called capital outflow |
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Term
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Definition
| the year used as a basis for comparison when computing real GDP or a price index |
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Term
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Definition
| a measure of the average price level of goods and services based on the ratio of nominal GPD to year real GPD, stated relative to the price of a chosen base year |
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Term
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Definition
| a weighted average of the prices of goods and services expressed in relation to a base year value of 1.0 |
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Term
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Definition
| a weighted average of the prices of goods and services expressed in relation to a base year value of 100 |
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Term
| Producer Price Index (PPI) |
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Definition
| a price index based on a sample of goods and services bought by business firms |
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Term
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Definition
| a financial institution whose principal business consists of accepting deposits and making loans |
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Term
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Definition
| a term for investment banks, mutual funds, hedge funds, and other institutions that provide bank-like services but do not fall under the full range of regulations that apply to depository institutions |
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Term
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Definition
| a government agency responsible for carrying out monetary policy and often also for regulating a country's banking system |
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Term
| Federal Reserve System (the Fed) |
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Definition
| the central bank of the United States, consisting of twelve regional Federal Reserve Banks and a Board of Governors in Washington D.C. |
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Term
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Definition
| a financial statement showing what a firm or household owns and what it owes |
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Term
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Definition
| all the things that the firm or household owns or to which it holds a legal claim |
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Term
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Definition
| all legal claims against a firm by non-owners or against a household by nonmembers |
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Term
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Definition
| a deposit from which customers can withdraw funds freely by check or electronic transfer to make payments to third parties |
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Term
| Originate-To-Hold Model Of Banking |
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Definition
| a model of banking that emphasized making loans and then holding the loans until maturity |
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Term
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Definition
| a state of affairs in which the net worth (capital) of a bank or other business falls to zero |
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Term
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Definition
| an asset's ability to serve directly as a means of payment, or be converted to cash without loss of nominal value |
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Term
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Definition
| cash in banks' deposits with the Federal Reserve System |
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Term
| Originate-To-Distribute Model Of Banking |
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Definition
| a model of banking in which banks sell loans soon after they make them, and use the proceeds from the sale to make new loans |
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Term
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Definition
| a process in which a specialized financial intermediary assembles a large pool of loans (or other assets) and uses those loans as a basis for issuing its own securities for sale to investors |
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Term
| Government Sponsored Enterprises (GSE's) |
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Definition
| specialized intermediaries that operate like private firms but are backed and controlled by the government and that engage in the business of securitizing home mortgage loans and, sometimes, other loans |
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Term
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Definition
| Mortgages with features like low down payments, variable interest rates, and prepayment penalties that make them attractive to low-income borrowers |
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Term
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Definition
| an asset that serces as a means of payment, a store of purchasing power, and a unit of account |
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Term
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Definition
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Term
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Definition
| a measure of the money supply that includes currency and transaction deposits |
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Term
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Definition
| a measure of the money supply that includes M1 plus retail money markets mutual funds shares, money market deposit accounts, and saving deposits |
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Term
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Definition
| a deposit at a bank that has limited, if any, checking privileges but which depositors can redeem at any time |
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Term
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Definition
| a deposit at a bank or thrift institution from which deposits can withdraw funds without payment of a penalty only at the end of an agreed-upon period |
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Term
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Definition
| an equation that shows the relationship among the money stock (M), the income velocity of money (V), the price level (P), and real domestic product (Q); written as MV = PQ |
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Term
| Velocity (Income Velocity Of Money) |
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Definition
| the ratio of nominal GPD to the money stock; a measure of the average number of times that people use each dollar of the money stock each year to produce final goods and services |
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Term
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Definition
| the sum of currency and reserve deposits, the monetary liabilities of the central bank |
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Term
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Definition
| the ratio of a bank's reserve (reserve deposits at the central bank plus vaults cash) to its own deposit liabilities |
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Term
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Definition
| the minimum amount of reserves a bank needs to hold that is consistent with regulations and safe banking practices |
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Term
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Definition
| the difference between the amount of reserves a bank actually holds and the minimum required by regulations |
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Term
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Definition
| a simplified version of a balance sheet that shows only items that change as a result of a given set of transactions |
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Term
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Definition
| the quantity of total deposits for each dollar of total reserves in a simple banking system where deposits are the only form of money, equal to 1/Reserve ratio |
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Term
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Definition
| the total quantity of money that the banking system can create for each dollar of the monetary base |
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Term
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Definition
| a purchase or sale of government securities by a central bank |
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Term
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Definition
| a market in which banks lend reserves to one another for periods as short as 24 hours |
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Term
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Definition
| the interest rate on overnight loans of reserves from one bank to another |
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Term
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Definition
| the interest rate charged by the Fed on loans of reserves to banks |
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Term
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Definition
| markets in which the currencies of different countries are traded for one another |
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Term
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Definition
| an increase in value of one country's currency relative to the currency of another country |
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Term
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Definition
| decrease in value of one country's currency relative to the currency of another country |
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Term
| Real Effective Exchange Rate (REER) |
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Definition
| a weighted average of the exchange rate of a country's currency relative to those of all trading partners |
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Term
| Purchasing Power Parties (PPP) |
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Definition
| a situation in which goods cost the same in one country as in another when prices are compared using the market exchange rate |
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Term
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Definition
| two or more countries that share a common currency |
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Term
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Definition
| wage rates adjusted to reflect changes in labor productivity |
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Term
| Consumer Price Index (CPI or CPI-U) |
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Definition
| a price index based on the market basket of goods and services for a typical urban household |
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