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Department of |
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financial markets:
markets in which funds are transferred from people who have an excess of
available funds to people who have a shortage The Bond Market and Interest Rates security: claim on the issuer’s future income asset: any financial claim or piece of property that is subject to ownership bond: debt security that promises to make payment periodically for a specified period of time interest rate: cost of borrowing or the price paid for the rental of funds (usually expressed as a percentage of the rental of $100 per year) See Figure 1 The Stock Market common stock: represents a share of ownership in a corporation See Figure 2 The Foreign Exchange Market foreign exchange market: where the conversion of the currency of one country into the currency of another country takes place foreign exchange rate: price of one country’s currency in terms of another’s See Figure 3 |
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Structure of the Financial System financial intermediaries: institutions that borrow funds from people who have saved and in turn make loans to others Banks and Other Financial Institutions banks: financial institutions that accept deposits and make loans Financial Innovation e-finance: new means of delivering financial services electronically due to dramatic improvements in information technology |
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money supply: anything that is generally accepted in payment for goods or services or in the repayment of debts Money and Business Cycles aggregate output: total production of goods and services unemployment rate: percentage of the available labor force unemployed business cycles: upward and downward movement of aggregate output produced in the economy recessions: periods of declining aggregate output See Figure 4 monetary theory: theory that relates changes in the quantity of money to changes in aggregate economic activity and the price level Money and Inflation aggregate price level: average price of goods and services in an economy inflation: a continual increase in the price level inflation rate: rate of change of the price level, usually measured as a percentage change per year See Figure 5 See Figure 6 Money and Interest Rates See Figure 7 Conduct of Monetary Policy monetary policy: management of money and interest rates by policymakers central bank: organization responsible for the conduct of a nation’s monetary policy Federal Reserve System (the Fed): central bank of the Fiscal Policy and Monetary Policy fiscal policy: decisions about government spending and taxation budget deficit: excess of government expenditures over tax revenues for a particular time period, typically a year budget surplus: arises when tax revenues exceed government expenditures See Figure 8 |
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· A simplified approach to the demand for assets · The concept of equilibrium · Basic supply and demand to explain behavior in financial markets · The search for profits · An approach to financial structure based on transaction costs and asymmetric information · Aggregate supply and demand analysis |
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Disclaimer: pages.slu.edu is a service of Saint Louis University, Saint Louis University does not control, monitor or guarantee the information contained in these sites. For more information » |