Economics matching

target price

a socially desirable price determined by factors other than the market

deficiency payment

check sent to producers that make up the differences between the actual market price and the target price

legal reserves

coins and currency that depository institutions hold in their vaults plus deposits they have placed in FED district banks

balance sheet

condensed statement showing all assets and liabilities

bank holding company

corporation that owns one or more banks

liabilities

debts and obligations to others

member bank reserve

deposit a member bank keeps at the Fed

Free enterprise economy

economy in which consumers and privately owned businesses make the majority of the WHAT, HOW, and FOR WHOM decisions

discount rate

interest rate the fed charges on loans to financial institutions

Regulation Z

law giving the Fed authority to extend truth-in-lending disclosures to people borrowing from corporations, retail stores, automoblie dealers, and lending institutions

capital good

manufactured goods that are used to produce other goods

real rate of interest

market rate of interest minus the rate of inflation

factor market

market where productive resources are bought and sold

Price ceiling

maximum legal price that can be charged for a product

price

monetary value of a product

liquidity

potential to be converted into easy cash

equilibrium price

price that produces neither a surplus nor a shortage

market equilibrium

prices are relatively stable, and quantity supplied is equal to quantity demanded

production

process of creating goods and services

consumption

process of using up goods and services to satisfy wants and needs

shortage

quantity demanded is greater than quantity supplied

surplus

quantity supplied is greater than quantity demanded at a given price

Economic model

set of assumptions and/or relationships that can be used to help analyze behavior and predict outcomes

Durable good

Any good that last three years or more when used regularly

Need

Basic requirement for survival

Production possibilities frontier

Diagram representing various combinations of goods and/or services that an economy can produce when all productive resources are fully employed

easy money policy

Fed plan to allow the money supply to grow and interest rates to fall

ration coupon

ticket that entitles the holder to a certain amount of a product

want

way of expressing a need that leads to a preference for some goods over others

service

work that is performed for someone