CH 2 Economics And Banking

recession 42

A decline in the GDP for two or more successive quarters of the year

unemployment rate 40

A lagging indicator that measures the number of workers who are at least 16 years old who are not working but have tried to find jobs within the past four weeks because there is different reasons many people are not working there are several different measurements of unemployment

socialism 27

A system whereby the government owns and or controls many basic businesses and services and the profits from them are distributed evenly among the people

Monetary policy 44

A tool used to manage the economy. Monetary policy is not exercised by the government instead it is executed by the Federal Reserve system

M-2 (45)

Another part of the money supply is that which is available for banks to lend out, such as savings deposits, money market accounts, and certificates of deposit less than 100,000.

open market operations 47

Buying and selling US treasury and federal agencies bonds on the open market

determinants of demand 31

Change in income levels population changes consumer preferences complementary goods substitute goods

M-1 (45)

Coins and bills currency travelers checks and checking's accounts constitute the narrowest measure of our money supply, which is referred to as M1 assets are the most liquid in that they are already in the form of cash or are the easiest to convert to cash

money supply 45

Combined amount of money available within an economy and it includes not only Currensy but also personal savings and checking accounts as well as deposit amounts from large institutions in particular the money supplying consists of the following different layers M1 M2 M3

substitute goods 33

Goods that can be used in place of other goods such as Coke for Pepsi or McDonald's quarter pound or for burger king whopper

Market economy 27

Individuals are more able to make their own economic decisions. For example, there are May be several pizza parlors in your town and each one may sell a slice of pizza at different prices. No one is restricting the number of pizza parlors and no one is controlling what prices they can charge

Market Price 29

Is the price at which everyone who wants the item can get it without wanting more or without any items being leftover

Micro economics 25

Is the study of how individual businesses household and consumers make decisions to allocate their limited resources in the exchange of goods and services

Macro economics 25

Is the study of the behavior of the overall economy.

M-3 (45)

Larger than 100,000, money market accounts held by large banks and corporations and deposit of euro dollars make up and three. The federal reserve board of governors has stopped publishing M3 data

Monopolistic competition 37

Many buyers and sellers and little differentiation exist between the products, but there is perceived differences among consumers

productivity 41

Measures the quality of goods and services that affirms human and physical resources can provide in a given time. They can be calculated as a physical measure or as a monetary measures

shortage 30

Occurs when the supply is less then the demand. This creates a shortage of a supply

Monopoly 35

One company dominates an entire industry no substitutes exist

Oligopoly 36

Only a few sellers exist and each seller has a fairly large share of the market

Business cycle 42

Over time, the economy naturally goes through periodical increases and decreases in inflation.

Structural Unemployment 41

Permanent unemployment that occurs when an industry changes in such a way that those jobs are terminated completely

producer price index 40

Ppi is a coincident indicator that tracks the average change in prices at the wholesale level

Complementary goods 32

Products or services that go with each other and are consumed together, such as the iphone and the apps associated with it.

supply 29

Refers to how much of a good or service is available for purchase at any given time

determinants of supply 33

Technology changes changes in resources prices price expectations the number of suppliers the price of substitute goods

privatization 27

The conversion of government owned production and services to privately owned profit seeking enterprises

planned economic system 26

The government plays a significant role in determining the goods and services produced and distributed

Market (27)

The mechanism by which of buyers and sellers exchange goods and services

mixed economy

The most economical system and the most common. A blend of market and planned economies

perfect competition 37

This occurs when there are many buyers and sellers of products that are virtually identical and in the seller can easily enter and exit the market

surplus 30

Unsold product left over ,creating a surplus

supply curve 30

We can illustrate this relationship between supply and price in a graph that economists call a supply curve

Seasonal unemployment 41

Woodworkers get laid off during the off-season such as those in snow or beach rental industries or agricultural or other holiday shopping season ends

deflation 39

a continuous decrease in prices over time.

Inflation 39

a rise in the general level of prices over time.

currency 29

a unit of exchange for the transfer of goods and services, provides a consistent standard.

depression 43

a very server or long secession, usually associated with falling prices.

demand curve 30

as price decreases, demand increases.

disinflation 39

continuous decrease in prices over time

reserve requirement 46

determined by the federal reserve bank, is the minimum amount of money banks must hold in reserve to give to their depositors who want to withdraw it

demand 30

how much of a good or a service people want to buy at any given time. People are willing to buy as much as they need, but people have limited resources (money)

Consumer price Index 39

is a Benchmark used to track changes in the price of goods and services that consumers purchase over a period of time. it is a lagging indicator , so it shifts after the economy changes.

economy 26

is a system that tries to balance the available resources of a country, such as land capital and labor against the wants and needs of consumers

Communism 26

is an economic system in which a states government makes all economic decisions and controls all the social services as well as many of the major resources required for the production of goods and services.

Capitalism 27

is an economic system that allows freedom of choice and encourages private ownership of the resources required to make and provide the goods and services we enjoy. Capitalism has become a major influence in the western worlds economic systems. pricing is developed by a market

Frictional unemployment 40

is temporary unemployment that results when workers move between jobs, careers and locations. This is just the result of moving from one job to another

Federal funds rate 46

is the interest rate banks charge other banks when they borrow funds overnight from one another

Cyclical unemployment 41

is unemployment that occurs when firms must cut back their workforce when there is a downturn in the business cycle. Once the demand for goods and services increases, companies begin to hire again.

Gross Domestic Product 38

measures how productive a nation is. The overall market value of final good and services produced in a country in a year.

Equilibrium price 30

or the market price is illustrated in a supply and demand curve. the point that the two meet.

Federal open market committee 44

sets the policies of the fed, including its monetary policies. through its monetary policy, the federal reserve affects the nation;s money supply and helps shape the direction of the economy

leading indicators

statistics that can be used to help predict how the economy will do in the near future

lagging indicators

statistics that change only after the economy as a whole changes

coincident indicators

statistics that reflect how the economy is currently doing

Law of supply 29

the amount supplied will increase as the price increases' a;sp if the price is lower, less of the product will be supplied.

Federal reserve System 44

the fed is the central banking system of the united states. created by congress as an independent governmental entity, it includes 12 regional federal reserve banks.

economics 25

the study of how individuals and businesses make decisions to best satisfy wants, needs and desires. with limited resources

economic Indicators 38

these indicators are closley watched gross domestic product consumer and producer price indices the unemployment rate

Fiscal policy 43

to determine the appropriate level of taxes and government spending

discount rate 46

when banks borrow emergency funds from the Fed, they are charged an interest rate, called discount rate.

duopoly 36

whereonly two suppliers exist, although in reality the definition is generally used to situations where only two firms dominate a market. pesi and coke