Economics U2

Usury

the practice of lending money at exorbitant rates

Board of Governors

the seven-member board that oversees the Federal Reserve System

unit of account

An agreed-upon measure for stating the prices of goods and services

medium of exchange

Any item sellers generally accept and buyers generally use to pay for a good or service; money; a convenient means of exchanging goods and services without engaging in barter.

balanced budget

Budget in which revenues are equal to spending

M2

M1 plus savings accounts, certificates of deposit, and other liquid assets

discount rate

The interest rate on the loans that the Fed makes to banks

natural monopoly

a competitive advantage not legally or purposefully created

pursuit of profit

a component of a free enterprise system that creates incentive for business owners to provide products and services.

startup

a new company started by an entrepreneur

discretionary fiscal policy

a policy created by congress

automatic fiscal policy

a policy created in response to the economy

collusion

a situation in which competitors work together to artificially set prices

budget deficit

a situation in which the government spends more than it takes in

budget surplus

a situation in which the government takes in more than it spends

oligopoly

an industry with few competitors and high entry barriers

central bank

an institution that manages the the supply of money in the economy

cartel

an international monopoly

legal monopoly

competitive advantage created or protected by law

monopoly

complete control over a product or market with little or no competition

perfect competition

creates a large market with many options for the consumers

expansionary fiscal policy

increases aggregate demand

thrift institutions

mutual savings banks, S&Ls, and credit unions that offer many of the same services as commercial banks

contractionary fiscal policy

reduction of government spending combined with raising the taxes

competition

rivals that deal in similar products or services

open market operations

the buying and selling of government securities to alter the supply of money

dollar gold convertibility

the circulation of dollars backed by gold reserves

required reserve ratio

the fraction of deposits that banks are required to keep in reserve

chair

the head of the board of governors of the federal reserve system

FOMC (Federal Open Market Committee)

12 members. 7 board members, 1 pres, 4 other

fiscal policy

A government policy for dealing with the budget (especially with taxation and borrowing)

M1

currency, demand deposits, traveler's checks, and other checkable deposits

New York Federal Reserve

implements monetary policy

store of value

something that keeps its value if it is stored rather than used