Discovery Unit 21 Glossary Flashcards Preview

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Flashcards in Discovery Unit 21 Glossary Deck (20):
1

national saving

Income left in the economy after paying for all consumption spending by households and government spending. Also known as just saving.

2

banks

The primary job of a bank is to act as an intermediary, taking in deposits from savers and then loaning that money to people who want to borrow.

3

Financial markets

Marketplaces where savers and borrowers can exchange funds directly. The three main types are the bond market, stock market, and loanable funds market.

4

bond market

Type of financial market where governments and corporations can borrow money directly from savers.

5

stock market

Type of financial market where companies might be able to generate funding for expansion. This kind of financing is known as equity financing because people who buy the stock that a company is selling are buying equityラor ownershipラin that company.

6

loanable funds market

Type of financial market where people go to borrow money. The term loanable funds refers to money that is available for borrowing by households,
businesses, and governments. Loanable funds come from both private sector saving and public saving.

7

Financial intermediaries

Allow savers to provide funds to borrowers indirectly, without having to identify who the borrower is. These intermediaries include banks, mutual funds, credit unions, insurance companies, and stockbrokers.

8

mutual fund

Financial intermediary that is a collected pool of funds from many investors, each of which may have only a relatively small amount of money available to invest that is divided among many different firms in order to create a diversified portfolio. These mutual funds are managed by professional investors, who are paid a management fee.

9

Gross Domestic Product

The market value of all final goods and services produced in the economy during a defined period of time.

10

Net taxes

Represent the difference between the amount of taxes collected by governments and the amount of transfer paymentsラsuch as Social Security and welfareラthat governments return to households.

11

disposable income

Income minus net taxes. When they have disposable income, consumers have essentially two choices: spend or save.

12

household saving

Income less net taxes (disposable income) minus consumption.

13

public saving

Amount of money the government receives in net taxes minus any spending.

14

shortage

Occurs if buyers want to buy more than sellers want to sell. Also known as excess demand.

15

surplus

Occurs when sellers want to sell more than buyers want to buy at any given price. With a surplus situation, prices drop until the market reaches equilibrium. Also refers to when there are more loanable funds than borrowers want to borrow. Also known as excess supply.

16

budget deficit

Occurs when tax revenue is less than spending.

17

budget surplus

Occurs when tax revenue is greater than spending.

18

Government debt

Accumulation of money, over time, that a government has borrowed but has not yet paid back.

19

saving (S)

Income left in the economy after paying for all consumption spending by households and government spending. Also known as national saving.

20

Crowding out

Occurs when government deficit spending results in less private spending.