Macroeconomic Booklet Four Flashcards
1
Q
Asset
A
- a thing that someone owns which has a market value and is capable of generating an income
2
Q
Barter
A
- trading one good or service directly for another
3
Q
Broad money
A
- includes everything in narrow money but also assets that serve as stores of value but are too illiquid to serve as a medium if exchange
4
Q
Capital markets
A
- financial market which provides long-term lending, with assets such as government bonds maturing in a year or more. Made up of primary and secondary markets, depending on whether these assets are issued new or re-sold
5
Q
Capital ratio
A
- proportion of a bank’s funding that has come in the form of equity, as opposed to deposits etc
6
Q
Central bank
A
- bank such as the Bank of England that acts as a national bank and provides services to government and the banking system and controls monetary policy
7
Q
Commercial bank
A
- financial institution which aims to make a profit by selling banking service tonite customers
8
Q
Commercial bills
A
- like treasury bills, but to raise financial capital for firms
9
Q
Commodity money
A
- use of commodities with intrinsic value to facilitate trade
10
Q
Corporate bonds
A
- a long-term source of finance for firms, where investors buy a bond for a sum of money which is returned to them when the bond matured, in addition to an annual coupon
11
Q
Coupon
A
- annual payment to owners of government bonds expressed either as a fixed amount or as a percentage of the face value
12
Q
Equity
A
- the money put into a business by its shareholders
13
Q
Financial conduct authority (FCA)
A
- microprudential regulator that focuses on promoting competition and protecting consumers
14
Q
Financial policy committee (FPC)
A
- macroprudential regulator whose primary function is to maintain the stability of the financial system overall, with a secondary objective in supporting the government’s economic policy
15
Q
Foreign exchange markets
A
- trade in foreign currencies
16
Q
Forward guidance
A
- form of unconventional monetary policy whereby the central banks give signals to financial markets over the future direction of monetary policy
17
Q
Fractional reserve banking
A
- system of banking where only a fraction of deposits are held in cash available for withdrawal
18
Q
Funding for lending scheme (FLS)
A
- scheme launched by the Bank of England in July 2012, designed to encourage banks and building societies to expand lending to households and SMEs by offering them cheap credit
19
Q
Government bonds/gilts
A
- long-term source of finance for governments, used to finance a budget deficit, where investors buy a bond for a sum of money which is returned to them when the bond matures, in addition to an annual coupon
20
Q
Investment bank
A
- bank which does not generally accept deposits from the public but deals directly in financial markets for their own account and offers financial advice and consultancy, help with stock market flotation
21
Q
Liability
A
- something that is owed to someone
22
Q
Liquidity
A
- ease with which an asset can be converted into chas without loss of value
23
Q
Liquidity ratio
A
- ratio between a bank’s liquid assets and its expected outflows
24
Q
Macroprudential
A
- relating to the overall stability of the financial system
25
Q
Maturity date
A
- date on which a financial asset such as a bill or bond is redeemed
26
Q
Microprudential
A
- relating to risks to individuals banks and financial institutions
27
Q
Money markets
A
- financial market which provides short-term lending, with assets maturing in less than a year
28
Q
Money multiplier
A
- maximum multiple of its deposits that commercial banks can create by advancing deposits to borrowers
29
Q
Moral hazard
A
- scenario where a firm takes excessive risk in the pursuit of profit, knowing that someone else will bear a significant proportion of the cost
30
Q
Narrow money
A
- money that can be used as a medium if exchange; chad and liquid deposits in banks
31
Q
Profitability
A
- extent of which an enterprise earns profits
32
Q
Prudential regulation authority (PRA)
A
- microprudential regulator that regulates and supervises individual banks, building societies, credit unions, insurers and major investment firms
33
Q
Quantitative easing
A
- form on unconventional monetary policy characterised by large-scale purchase of securities by central bank using newly-created money
34
Q
Quantitative tightening
A
- the process of reversing quantitative easing
35
Q
Representative money
A
- money backed by something such as gold but represented by something else
36
Q
Reserve requirement
A
- proportion of deposits that a commercial bank is required to retain in a system of fractional reserve banking
37
Q
Security
A
- extent to which a loan is backed by collateral which can be seized in the event of a default
38
Q
Shares
A
- financial asset that confers part ownership of ah incorporated firm, the holder of which will receive a share of any profits distributed
39
Q
Slight deposits
A
- money deposited with a financial institution that can be withdrawn at any time with no penalty
40
Q
Stress test
A
- simulation designed to assess the resilience of a financial institution to an adverse scenario
41
Q
Systemic risk
A
- risk posed to the whole financial system because of the connections between institutions and markets rather than from the failure of a single institution
42
Q
Time deposit
A
- money deposited with a financial institution that can only be withdrawn after a certain notice period or from which withdrawals incur a penalty
43
Q
Token money
A
- money that has no link to anything of any intrinsic value
44
Q
Treasury bills
A
- short-dated loans raised either by the government with no interest on them as such : they are sold at discount and redeemed at parity
45
Q
Yield
A
- return on an asset, usually the annual return expressed as a percentage of its current market price a
