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Krugman Wells
Chapter 9 Economics
29
Economics
Undergraduate 1
04/14/2009

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Cards

Term
Savings-Investment Spending Identity
Definition
savings and investment spending are always equal for the economy as a whole.
Term
Budget Surplus
Definition
difference between tax revenue and gov spending when tax revenue exceeds gov spending.
Term
Budget Deficit
Definition
difference between tax revenue and gov spending when gov spending exceeds tax revenue.
Term
Budget Balance
Definition
difference between tax revenue and gov spending.
Term
National Savings
Definition
1. the sum of private savings.
2. total amount of savings gnerated. within the economy
Term
Open Economy
Definition
an economy in which goods and money can flow into and out of the country.
Term
Capital Inflow
Definition
Term
Inflows
Definition
foreign savings that finance investment spending in the country.
Term
Outflows
Definition
domestic savings that finance investment spending in another country.
Term
Loanable Funds Market
Definition
examines the market outcome of the demand for funds generated by borrowers and the supply of funds provided by lenders.
Term
Interest Rate
Definition
price, calculated as a percentage of the amount borrowed, charged, by lender for the use of their savings for one year.
Term
Rate of Return
Definition
profit earned on the project expressed as a percentage of its cost.
Term
Crowding Out
Definition
negative effect of budget deficits on private investment.
Term
wealth
Definition
value of accumulated savings
Term
Financial Asset
Definition
paper claim that intitles the buyer to future income from the seller
Term
Physical Asset
Definition
claim on a tangible object that gives the owner the right to dispose of the object as he or she wishes
Term
Liability
Definition
requirement to pay income in the future.
Term
Transaction Costs
Definition
expenses of negotiating and executing a deal.
Term
Financial Risk
Definition
uncertainty about future outcomes that involve financial losses and gains.
Term
Diversification
Definition
investing in several differnt things so that the possible losses are independent events.
Term
Liquid
Definition
can be quickly converted into cash
Term
Illiquid
Definition
cannot be quicky converted into cash
Term
Loan
Definition
lending agreement
Term
Financial Intermediary
Definition
institution that deals with money
(banks, credit unions, etc.)
Term
Mutual Fund
Definition
creates a stock portfolio and then resells shares of this portfolio to individual investors.
Term
Pension Fund
Definition
holds assets in order to provide retirement income to its members.
Term
Bank Deposit
Definition
claim on a bank that obliges the bank to give the depositor his/her cash when demanded.
Term
Efficient Markets Hypothesis
Definition
asset prices embody all publicly available information.
Term
Random Walk
Definition
movement over time of an unpredictable variable.
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