Lecture Notes 5: Wealth and Wealth Accumulation Flashcards
1
Q
wealth
A
wealth = assets - liabilities
2
Q
asset
A
something that is owned and of value
3
Q
real asset
A
physical asset like real estate, stamps, natural resources, physical stock of capital
4
Q
financial asset
A
claim on someone’s income like stocks, bonds, savings account, loans, currencies
5
Q
liability
A
amount that is owed to someone else
6
Q
nominal interest rate (i)
A
the rate of return that a borrower offers a lender
7
Q
real interest rate (r)
A
rate of which the real value of an asset changes over time
8
Q
FA foreign asset
A
claims to foreigners by residents
9
Q
FL foreign liability
A
claims to residents by foreigners
10
Q
change in FA > change in FL
A
nation is a net lender
11
Q
change in FA < change in FL
A
nation is a net borrower
