Super Extra Special Wonderful Section Flashcards
Shareholders
group of owners of a corporation
Publicly Held Company
Owned by THOUSANDS who trade shares among public stock exchange
Large Business
Privately Held Company
Owned by SMALL # of ppl who know each other
Small Business
Start off as this, grow to public
Inflation
Too much money not enough stuff
Ebay
Shortage of goods so prices go up
Deflation
Too much stuff not enough money
TJ Maxx
Abundance of goods that ppl don’t buy
Equilibrium Point
Product demand = product produced
Supply = demand
No abundance, no shortage
When lots of people want stock the price is _________
Driven up
When more people want to sell stock than buy it, prices __________
Go down
Stock prices will rise when a company….
Reports
- Good earnings
- New product
- Merges with another company
Stock prices will decline when a company….
Reports
- loss in earnings
- announces reorganization that will reduce profits
Quotation
Purchasing price of a stock at a particular time
NYSE ?
New York Stock Exchange = largest security market
NASDAQ
National Association of Securities Dealers Automated Quotations = technology market
Dow Jones
Average price of 10 selected industrial stocks used as a measure for general market trends
Bull Market
Stock prices rising
Bull shoots up
Bear Market
Stock prices dropping
Bear throws down
A bull expects _____
prices to rise
A bear expects ______
prices to drop
3 main sectors of US market economy
Businesses, households, government
Business IN
Services + Products
Business OUT
Expenses + Taxes
Household IN
Wages + Payments
Household OUT
Consumption + Taxes
Government IN
Taxes
Government OUT
Services + Expenses
Commercial banks report to ______
The Federal Reserve
Federal Reserve has _____ banks
12
Federal Reserve is controlled by ______________ which are _______________.
- the Board of Governors of the Federal Reserve
- appointed by the president and congress
Board of Governors is made up of
Open Market Committee and Advisory Council
Fiscal Tool
GOVERNMENT
slow to work
Monetary Tool
FED RESERVE
can happen quickly
Expansionary Tool
INCREASE # of money in circulation
inflate balloon
Contractionary Tool
DECREASE # of money in circulation
deflate balloon
Fiscal Expansionary Tools:
- Increase government spending (puts more $ in)
- Cut taxes (more $ to spend)
Monetary Expansionary Tools:
- Open market operations - securities + bond purchases
- Reserve buys back bonds so more $ is in economy and not sitting in a bond - Decrease interest rate (borrowing $ is cheaper)
- Decrease Reserve Requirements
Fiscal Contractionary Tools:
- Decrease government spending
- Raise taxes
Monetary Contractionary Tools:
- Open market operations - securities and bond sales
- sells bonds to collect $ from circulation - Increase the interest rate (borrowing $ is more expensive)
- Increase Reserve Requirements
Reserve Requirements
Amount of physical money a commercial bank is required to keep in the actual bank
Money goes INto a bank through:
Deposits, payments, interest + fees
Money goes OUT of a bank through:
Withdrawals, loans, expenses, and interest/payments
Bank expenses can only be paid for with _______
Gross profit
Gross profit
Money the bank actually has
NOT money the bank is borrowing from people who have put $ into the bank
Loans have ________ and ___________
Principle
Interest
Principle (loans)
Amount of payment actually owed that was borrowed
Interest (loans)
“Thank you” to the bank for letting me borrow money
