Basic Definitions Flashcards
Asset
Any financial claim or piece of property that is subject to ownership.
Bank
Financial institutions that accept deposits and make loans.
Bond
A debt security that promises to make periodic payments for a specified period of time.
Central Bank
Organization responsible for the conduct of a nation’s monetary policy.
E-Finance
Delivery of financial system electronically.
Financial Market
Markets in which funds are transferred from people who have an excess of available funds to people who have a shortage.
Financial Intermediaires
Institutions that borrow funds from people who have saved and in turn make loans to people who need them.
Financial Innovation
The development of new financial products and services.
Financial Crises
Major disruptions in financial markets that are characterized by sharp declines in asset prices and the failure of many financial and non-financial firms.
Fiscal Policy
Decisions about government spending taxation.
Foreign Exchange Market
Where the conversion of currency takes place.
Foreign Exchange Market
Price of one country’s currency in terms of another.
GDP
A measure of the aggregate output → value of all final goods and services produced in an economy.
Inflation
A continual increase in the price level.
Interest Rate
The cost of borrowing or the price paid for the rental funds.
Inflation Rate
Rate of change of the price level.
Monetary Policy
The management of money and interest rates.
Monetary Theory
The theory that relates the quantity of money and monetary policy to changes in aggregate economic activity and inflation.
Money
Anything that is generally accepted as payment for goods and services or in the repayment of debt.
Recession
Period of declining level of aggregate output.
Security
A claim on the issuer’s future income or asset.
Stock
A share of ownership in a corporation.
Unemployment rate
The percentage of available labor force employed.
