Download Economics Terms: Growth, Finance, Money, Capital, and Financial Markets and more Quizzes Economics in PDF only on Docsity! TERM 1 growth transformation DEFINITION 1 savings wealth > investment capital > real GDP growth TERM 2 finance DEFINITION 2 providing the funds that finance expenditures on capitalshow firms/businesses obtain and use financial resources TERM 3 money DEFINITION 3 what we use to pay for goods and serviceshow is it held, managed, created, and used, TERM 4 physical capital DEFINITION 4 produced in pastused to produce today's goodstools, machines, buildings, etc. TERM 5 financial capital DEFINITION 5 funds used to buy physical capital TERM 6 investment DEFINITION 6 purchase of new plant and equipment, additions to inventory TERM 7 depreciation DEFINITION 7 decrease in value of capital due to wear tear and obsolesence TERM 8 gross investment DEFINITION 8 total spent on new capital and replacing depreciated capital TERM 9 net investment DEFINITION 9 change in value of capital TERM 10 wealth vs. savings DEFINITION 10 wealth- value of all things people ownsavings- amount of income not spent on consumption and taxescapital gains- increased market value of assets TERM 21 pension funds DEFINITION 21 use the pension contribution of firms and workers to buy bonds and stocks TERM 22 insurance companies DEFINITION 22 provides risk-sharing services by providing compensation for misfortunesPREMIUMS! TERM 23 investment banks (shadow banks) DEFINITION 23 borrow funds in the overnight marketloan funds long term to speculative projects TERM 24 gov't sponsored mortgage lender DEFINITION 24 gov't sponsored enterprises that bought mortgages from banks, packaged them into mortgage-backed securities, and sold them.(Ex. Fannie Mae, Freddie Mac) TERM 25 financial assets DEFINITION 25 stocks, bonds, short-term securities, loans TERM 26 interest rate DEFINITION 26 return/asset priceexpressed as % TERM 27 bank leveraging DEFINITION 27 leveraging rate 9:1 TERM 28 insolvency DEFINITION 28 negative net worth; firm goes out of business TERM 29 net worth DEFINITION 29 total market value of what it has minus the market value of what it had borrowed. TERM 30 illiquidity DEFINITION 30 firms assets exceeds credits, but loans made are long-term with a sudden demand for repayment TERM 31 financial contagion DEFINITION 31 when one bank fails, creditors become nervous about the ohers. TERM 32 deleveraging DEFINITION 32 under pressure to reduce debt and raise cash; sell assets often at discounted price TERM 33 corporation lost billions (financial crisis of 2007) DEFINITION 33 assets were difficult to access >>>uncertainity increased >>>>banks stopped loaning to other banks TERM 34 write down DEFINITION 34 the amount by which asset's value is reduced TERM 35 financial panic DEFINITION 35 sudden and widespread disruption of the financial market that occurs when people lose faith in the liquidity of financial institutions and markets TERM 46 net borrower DEFINITION 46 = foreign borrower TERM 47 net exporter DEFINITION 47 = foreign lender TERM 48 negative net exports DEFINITION 48 the rest of the world supplies funds to us TERM 49 positive net exports DEFINITION 49 we are a net supplier of funds to the rest of the world TERM 50 world equilibrium DEFINITION 50 world equilibrium interest rate makes Qs , w LF= Qd,w LF in world economy
