Term
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Definition
Tools, instruments, machines, buildings, and other constructions that have been Produced in the past and that are used to produce goods and services |
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Term
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Definition
| The funds that firms use to buy and operate physical capital |
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Term
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Definition
| Is the total amount spent on new capital goods |
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Term
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Definition
Is the change inthe quantity of Capital - equals investment minus depreciation
Net Investment = (investment) - (depreciation) |
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Term
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Definition
| The value of all of the things that a person owns |
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Term
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Definition
| The amount of income that is not paid in taxes or spent on consumption goods. Savings adds to wealth |
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Term
| Markets for Financial Capital |
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Definition
Loans Market
Bonds Market
Stock Market |
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Term
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Definition
Businesses use short term loans to buy inventory or extend credit to customers
-Also applicable to households |
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Term
Stock Market
Includes:
Benefits for investors
Drawbacks For company |
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Definition
Claim to profits that a firm makes
Investors get: Dividend & increase in value of stock
Company Drawbacks:
Less ownership of the company
Devalue the company
Publicly traded differently than private |
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Term
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Definition
It is a debt for the issuer
Might be long term(decade)
or short term(months)
Often issue bonds to get paid for sales before the buyer can pay |
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Term
| Market for loanable funds is based on which rate? |
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Definition
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Term
| What are causes for changes in the demand for loanable funds? |
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Definition
1. Expected Profit
(more $ = demand loanable funds)
2. Objective Influences
Phase of business cycle
Technology Change
Population Growth |
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Term
| Loanable funds are used for |
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Definition
Business investment
Govt budget deficit
International investment or lending |
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Term
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Definition
Private savings
Government Budget
International Borrowing |
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Term
| What does a rise in the real interest rate do for the quantity of loanable funds demanded |
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Definition
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Term
| The real interest rate is the opportunity cost of _______ _________? |
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Definition
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Term
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Definition
| Expensesincurred in consumption, as opposed to incurred in the production of G + S |
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Term
| What does government surplus do to supply? |
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Definition
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Term
| What does government surplus do to the real interest rate? |
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Definition
| Because it increases supply, the real interest rate falls |
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Term
| What does government surplus do to private savings? Investment? |
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Definition
| Decreases it because when the interest rate falls people are more willing to invest, there for it increases investment. |
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Term
| 4 Main factors in the change of supply of loanable funds: |
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Definition
1.Disposable income
2. Wealth
3. Expected Future income
4. Default risk
(and real interest rate) |
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