Chp. 27 & 22 Vocab Econ

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Across
  1. 1. number a unit-free number derived from the price level over a number of years, which makes computing inflation rates easier, since the index number has values around 100
  2. 2. a general and ongoing rise in price levels in an economy
  3. 6. multiplier formula total money in the economy divided by the original quantity of money, or change in the total money in the economy divided by a change in the original quantity of money
  4. 8. of account the common way in which we measure market values in an economy
  5. 9. money supply a definition of the money supply that includes everything in M1, but also adds savings deposits, money market funds, and certificates of deposit
  6. 13. making loans or investments with a variety of firms, to reduce the risk of being adversely affected by events at one or a few firms
  7. 14. a balance sheet with a two-column format, with the T-shape formed by the vertical line down the middle and the horizontal line under the column headings for “Assets” and “Liabilities”
  8. 15. mortgage (ARM) a loan a borrower uses to purchase a home in which the interest rate varies with market interest rates
  9. 18. an outburst of high inflation that often occurs (although not exclusively) when economies shift from a controlled economy to a market-oriented economy
  10. 21. funds that a bank keeps on hand and that it does not loan out or invest in bonds
  11. 22. market fund the deposits of many investors are pooled together and invested in a safe way like short-term government bonds
  12. 25. any amount or debt that a firm or an individual owes
  13. 26. of goods and services a hypothetical group of different items, with specified quantities of each one meant to represent a “typical” set of consumer purchases, used as a basis for calculating how the price level changes over time
  14. 27. whatever serves society in four functions: as a medium of exchange, a store of value, a unit of account, and a standard of deferred payment.
  15. 30. card like a check, is an instruction to the user’s bank to transfer money directly and immediately from your bank account to the seller
  16. 32. and currency in circulation the coins and bills that circulate in an economy that are not held by the U.S Treasury, at the Federal Reserve Bank, or in bank vaults
  17. 36. card immediately transfers money from the credit card company’s checking account to the seller, and at the end of the month the user owes the money to the credit card company; a credit card is a short-term loan
  18. 39. a price, wage, or interest rate is adjusted automatically for inflation
  19. 41. Price Index (CPI) a measure of inflation that U.S. government statisticians calculate based on the price level from a fixed basket of goods and services that represents the average consumer's purchases
  20. 42. of value something that serves as a way of preserving economic value that one can spend or consume in the future
  21. 43. negative inflation; most prices in the economy are falling
  22. 44. bias an inflation rate calculated using a fixed basket of goods over time tends to overstate the true rise in the cost of living, because it does not take into account that the person can substitute away from goods whose prices rise considerably
  23. 46. money an item that is used as money, but which also has value from its use as something other than money
  24. 48. goods bias inflation calculated using a fixed basket of goods over time tends to overstate the true rise in cost of living, because it does not account for improvements in the quality of existing goods or the invention of new goods
Down
  1. 1. Price Index a measure of inflation based on the prices of merchandise that is exported or imported
  2. 3. money has no intrinsic value, but is declared by a government to be the country's legal tender
  3. 4. deposit account that the depositor has committed to leaving in the bank for a certain period of time, in exchange for a higher rate of interest; also called certificate of deposit
  4. 5. time mismatch customers can withdraw a bank’s liabilities in the short term while customers repay its assets in the long term
  5. 7. Cost Index a measure of inflation based on wages paid in the labor market
  6. 10. deposit bank account where you cannot withdraw money by writing a check, but can withdraw the money at a bank—or can transfer it easily to a checking account
  7. 11. literally, trading one good or service for another, without using money
  8. 12. Price Index (PPI) a measure of inflation based on prices paid for supplies and inputs by producers of goods and services
  9. 16. institution institution that accepts money deposits and then uses these to make loans
  10. 17. currencies dollar bills or other currencies with values backed up by gold or another commodity
  11. 19. item of value that a firm or an individual owns
  12. 20. of exchange whatever is widely accepted as a method of payment
  13. 22. money supply a narrow definition of the money supply that includes currency and checking accounts in banks, and to a lesser degree, traveler’s checks.
  14. 23. sheet an accounting tool that lists assets and liabilities
  15. 24. system helps an economy exchange goods and services for money or other financial assets
  16. 28. deflator a measure of inflation based on the prices of all the GDP components
  17. 29. adjustments (COLAs) a contractual provision that wage increases will keep up with inflation
  18. 31. year arbitrary year whose value as an index number economists define as 100; inflation from the base year to other years can easily be seen by comparing the index number in the other year to the index number in the base year—for example, 100; so, if the index number for a year is 105, then there has been exactly 5% inflation between that year and the base year
  19. 33. of deferred payment money must also be acceptable to make purchases today that will be paid in the future
  20. 34. worth the excess of the asset value over and above the amount of the liability; total assets minus total liabilities
  21. 35. intermediary an institution that operates between a saver with financial assets to invest and an entity who will borrow those assets and pay a rate of return
  22. 37. deposit checkable deposit in banks that is available by making a cash withdrawal or writing a check
  23. 38. costs the costs associated with finding a lender or a borrower for money
  24. 40. coincidence of wants a situation in which two people each want some good or service that the other person can provide
  25. 42. card stores a certain value of money on a card and then one can use the card to make purchases
  26. 45. inflation index a measure of inflation typically calculated by taking the CPI and excluding volatile economic variables such as food and energy prices to better measure the underlying and persistent trend in long-term prices
  27. 47. capital a bank’s net worth