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AP Macroeconomics > Unit 4 Vocab > Flashcards

Unit 4 Vocab Flashcards

1
Q

The price, calculated as a percentage of the amount borrowed, charged by lenders to borrowers for the use of their savings for one year

A

Interest rate

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2
Q

Savings and investment spending are always equal for the economy as a whole

A

Savings-investment spending identity

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3
Q

The difference between tax revenue and government spending when tax revenue exceeds government spending

A

Budget surplus

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4
Q

Difference between tax revenue and government spending when government spending exceeds tax revenue

A

Budget deficit

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5
Q

The difference between tax revenue and government spending

A

Budget balance

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6
Q

The sum of private savings and the budget balance, is the total amount of savings generated within the economy

A

National savings

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7
Q

Equal to the total inflow of foreign funds minus the total outflow of domestic funds to other countries

A

Capital inflow

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8
Q

The value of a household’s accumulated savings

A

Wealth

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9
Q

A paper claim that entitles the buyer to future income from the seller

A

Financial asset

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10
Q

A claim on tangible object that gives the owner the right to dispose of object as he or she wishes

A

Physical asset

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11
Q

A requirement to pay money in the future

A

Liability

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12
Q

The expenses of negotiating and executing a deal

A

Transaction costs

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13
Q

Uncertainty about future outcomes that involve financial losses and gains

A

Financial risks

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14
Q

An asset is ___ if it can be quickly converted into cash without much loss of value

A

Liquid

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15
Q

An asset is ____ if it cannot be quickly converted into cash without much loss of value

A

Illiquid

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16
Q

Lending agreement between an individual lender and an individual borrower

A

Loan

17
Q

An institution that transforms funds it gathers from many individuals into financial assets

A

Financial intermediary

18
Q

A claim on a bank that obliges the bank to give the depositor his or her cash when demanded

A

Bank deposit

19
Q

A financial intermediary that provides liquid assets in the form of bank deposits to lenders and uses those funds to finance borrowers’ investment spending on liquid assets

A

Bank

20
Q

Any asset that can easily be used to purchase goods and services

A

Money

21
Q

The total value of financial assets in the economy that are considered money

A

Money supply

22
Q

An asset that individuals acquire for the purpose of trading for goods and services rather than for their own consumption

A

Medium of exchange

23
Q

A means of holding purchasing power over time

A

Store of value

24
Q

A measure used to set prices and make economic calculations

A

Unit of accounts

25
Q

A good used as a medium of exchange that has intrinsic value in other uses

A

Commodity money

26
Q

A medium of exchange with no intrinsic value whose ultimate value is guaranteed by a promise that it can be converted into valuable goods

A

Commodity-backed money

27
Q

A medium of exchange whose value derives entirely from its official status as a means of payment

A

Fiat money

28
Q

An overall measure of the money supply

A

Monetary aggregate

29
Q

the _____ of some current amount of money is the amount to which it will grow as interest accumulates over a specified period of time

A

Future value

30
Q

The _____ of $1 realizes one year from now is $1 / (1 + r): the amount of money you must lend out today in order to have $1 in one year. It is the value to you today of $1 realized from now.

A

Present value

31
Q

The present value of current and future benefits minus the present value of current and future costs

A

Net present value

32
Q

The currency that banks hold in their values plus their deposits at the federal reserve

A

Bank reserves

33
Q

The fraction of bank deposits that a bank holds as reserves

A

Reserve ratio

34
Q

The smallest fraction of deposits that the Federal Reserve requires banks to hold

A

Required reserve ratio

35
Q

A phenomenon in which many of a bank’s depositors try to withdraw their funds due to fears of a bank failure

A

Bank run

36
Q

Rules set by the Federal Reserve that determine the required reserve ratio for banks

A

Reserve requirements

37
Q

A bank’s reserves over and above its required reserves

A

Excess reserves

38
Q

The sum of currency in circulation and bank reserves

A

Monetary base

39
Q

The ratio of the money supply to the monetary base. It indicates the total number of dollars created in the banking system by each $1 addition to the monetary base

A

Money multiplier

AP Macroeconomics (7 decks)

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