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Macroeconomics > Exam 2 > Flashcards

Exam 2 Flashcards

(63 cards)

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1
Q

Economic Stability

A

economic growth with low inflation (price increases) and full employment of Resources.

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2
Q

Economic Expansions

A

Increases in aggregate output, income and employment (and generally rise in growth in investments, construction, consumption of goods/services, stock market indices and inflation)

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3
Q

Economic Contractions

A

declines in aggregate output, income and employment (and generally decreases in investments, construction, consumption of goods/services, stock market indices and possibly deflation)

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4
Q

Recession

A

2 consecutive quarters of decline in economic activity (or decline in GDP)

Recessions are ‘dips’ in total GDP long-term growth

Advanced economies tend to experience expansions and Recessions at same time

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5
Q

Economic Indicators

A

Changes before the economy has changed

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6
Q

Costs of Unemployment

A
  • Loss of income for unemployed
  • Less tax revenue and higher gov’t borrowing
  • Loss of human capital
  • Inefficient use of resources
  • Social problems / alienation
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7
Q

Furlough

A

suspension or discharge of a worker or workers on account of economic conditions or shortage of work, especially when temporary:

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8
Q

Layoff

A

a discharge of a worker or workers because of economic conditions or shortage of work

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9
Q

Frictional Unemployment

A

Normal turnover rate. This is usually described as short-run mismatch of skill and jobs

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10
Q

Structural Unemployment

A

Portion of unemployed resulting from changes in the structure of the economy which resulted in significant job loss in certain industries

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11
Q

Cyclical Unemployment

A

usually due to business cycle. Generally short-term. But can be long-term

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12
Q

Normal Unemployment %

A

4 - 6%

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13
Q

Entreprenuership

A

Self-employment through business ownership which has significant elements of risk, control, and reward

How it influences Economic Growth: creates jobs, take risks = creates better healthcare + education + welfare

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14
Q

Creativity

A

Novel ideas that are communicated, useful, and appealing

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15
Q

Invention

A

Creating something new

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16
Q

Innovation

A

Making the invention into a product form

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17
Q

Intellectual Property Rights

A

Legal protection of intellectual developments so they can be monetized

Incentive to create, invent and innovate

Ex: Patents, Copyright, Trademark, + Design

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18
Q

Private Property

A

Resources owned by individuals not gov’t.

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19
Q

Generic

A

Relating to a whole class or group.
Non-Brand name products

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20
Q

Pirated

A

Fake Goods

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21
Q

Reverse Engineering

A

Implementation -> Design -> Analysis -> Requirements

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22
Q

Business Lifecycle

A
  1. Startup
  2. Rapid Growth
  3. Maturity
  4. Decline
  5. Rebirth or Death
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23
Q

Profit

A

a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something

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24
Q

Investment of capital

A

devoting funds in plant, equipment and activity to (develop or produce) new product, sell, add value, utilize a new resource or better utilize a resources (new/improve process) in the pursuit of a profit.

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25
Investment
Expecting returns on money / future
26
Simple ROI equation
(Gains - Investment Costs) / Investment Cost
27
Risk Analysis
.
28
Bank
Financial institution licensed to receive deposits and make loans. Banks may also provide financial services such as wealth management, currency exchange, and safe deposit boxes.
29
Types of Banks
Central Commercial Cooperative Specialized
30
Credit Union
Nonprofit institution owned by its members Must qualify for a membership
31
NCUA
National Credit Union Administration
32
FinTech
Online competition to physical banks
33
Loan Risk
Banks tie interest rate to risk of the loan and risk of loan is based upon company results and future expectations/prospectus
34
Bond Rating
35
Bond
Generally, less risky than stocks Face value (Principle) + interest rate attached to it Is a loan for a given amount of years. Borrowing from investor. Company pays interest quarterly
36
FICO
Fair, Isaac, and Co.
37
Interest Rate
The cost of borrowing money expressed as a percentage of the loan amount
38
Investment Funding Stages
- Concept/ Start up stage: Angel/seed (very high risk) - Seed: Start up/early growth (high risk) - Private Venture capitalists: early to high growth (reduced risk) or ceiling
39
Entrepreneur Choices to scale up / continue growth
1. Retain Ownership Seeking loans or bonds 2. Merger / Acquisition Horizontal / Vertical / Conglomerate / Concentric 3. Sell start up / mature to private equity 4. Take company public un an IPO
40
Horizontal Merger & Acquisition
Companies in same industry
41
Vertical Merger & Acquisition
Companies at different stages of the supply chain
42
Conglomerate Merger & Acquisition
Companies in different industries
43
Concentric Merger & Acquisition
Companies in the same industry, but different stages of the supply chain
44
IPO
Initial Public Offering
45
SPAC
Special Purpose Acquisition Company Sole purpose is take company from private to public
46
Asset Classes
Cash Equity Fixed Income Real Estate Commmodities
47
Capital Market
markets for buying and selling equity and debt instruments Primary Secondary
48
Primary Market
A source of new securities. Often on an exchange, it's where companies, governments, and other groups go to obtain financing through debt-based or equity-based securities. Primary markets are facilitated by underwriting groups consisting of investment banks that set a beginning price range for a given security and oversee its sale to investors.
49
Secondary Market
The secondary market is where investors buy and sell securities they already own. It is what most people typically think of as the "stock market," though stocks are also sold on the primary market when they are first issued. The national exchanges, such as the New York Stock Exchange (NYSE) and the NASDAQ, are secondary markets.
50
Bond Types
Corporate Municipal Treasury Junk Bond Funds Term Serial Secured Debentures
51
Bond Yields
Equivalent to Interest Rate Bond price and yield rates move in opposite directions ie Higher the price, the lower the yield. In macro-economic expansions, generally, bond prices go down (stocks are preferred) (But the lower the price of the bond, the higher the yield so there is a reason to invest in bonds during ‘good’ times)
52
Bond and Stock Prices
Bond and stock prices tend, generally, to move in opposite directions. In ‘good’ times, Stock prices go up, bond prices tend to go down In ‘bad times’ Stock prices go down, bond prices tend to go up (move to safety)
53
Common Stock
- Voting Rights - Dividends Fluctuate - More Volatile
54
Preferred Stock
- No Voting Rights - Dividends are set - Less Volatile
55
Dividends per Share Formula
Annual Dividends / Purchase Price
56
NASDAQ
Dealer's Market More Tech No physical location More volatile + Growth Oriented
57
NYSE
Auction Style Market Physical Interaction Stricter listing requirements / More Stable
58
Market Index
Method of Measuring a section of the stock market * Dow Jones * S&P 500 * NASDAQ * Russell 3000 ○ Russell 2000 ○ Russell 1000
59
Mutual Fund
Representative of stock price
60
Productivity Formula
Output / Input
61
Solow Growth Model
Technological progress is necessary for sustained increases in standard of living exogenous neoclassical model of economic growth representing the changes in output level due to changes in labor, capital accumulation change, and technological progress.
62
LEAN
Higher quality + Lower Prices
63
Economies of Scope / Scale
Companies dealing with a variety of goods have better cost advantage than those specializing in the production of a single product / service

Macroeconomics (3 decks)

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