Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.
Loan Budget surplus Fisher effect Savings-investment spending identity Efficient markets hypothesis Crowding out Financial intermediary Pension fund Liquid Random walk Public savings Loanable funds market Wealth National savings Bank deposit Transaction costs Life insurance company Diversification Illiquid Present value Financial asset Default Mutual fund Net foreign investment (NFI) Financial risk Bank Loan-backed securities Budget deficit Physical asset Budget balance Liability | the total outflows of funds out of a country minus the total inflows of funds into that country; the difference between the amount of foreign investment undertaken by the country and the amount of domestic investment undertaken by foreigners. the difference between tax revenue and government spending when government spending exceeds tax revenue; dissaving by the government in the form of a budget deficit is a negative contribution to national savings. an institution, such as a mutual fund, pension fund, life insurance company, or bank, that transforms the funds it gathers from many individuals into financial assets. the difference between tax revenue and government spending when tax revenue exceeds government spending; saving by the government in the form of a budget surplus is a positive contribution to national savings. uncertainty about future outcomes that involve financial losses or gains. an accounting fact that states that savings and investment spending are always equal for the economy as a whole. describes an asset that can be quickly converted into cash with relatively little loss of value. a financial intermediary that creates a stock portfolio by buying and holding shares in companies and then selling shares of this portfolio to individual investors. a hypothetical market that brings together those who want to lend money (savers) and those who want to borrow (firms with investment spending projects). a paper claim that entitles the buyer to future income from the seller. Loans, stocks, bonds, and bank deposits are types of financial assets. the failure of a borrower to make payments as specified by the bond or loan contract. (of a household) the value of accumulated savings. the sum of private savings and the government’s budget balance; the total amount of savings generated within the economy. investment in several different assets with unrelated, or independent, risks, so that the possible losses are independent events. the difference between tax revenue and government spending. A positive budget balance is referred to as a budget surplus; a negative budget balance is referred to as a budget deficit; also known as public savings. a type of mutual fund that holds assets in order to provide retirement income to its members. the movement over time of an unpredictable variable. the difference between net tax revenue (T – TR) and government spending on goods and services, i.e., T – TR – G. A positive budget balance is a budget surplus, a negative budget balance is a budget deficit, and a zero budget balance is a balanced budget. the principle by which an increase in expected future inflation drives up the nominal interest rate, leaving the expected real interest rate unchanged. (of Y dollars) the amount of money needed today in order to receive X dollars at a future date given the interest rate. the negative effect of budget deficits on private investment, which occurs because government borrowing drives up interest rates. a financial intermediary that provides liquid assets in the form of bank deposits to lenders and uses those funds to finance the illiquid investments or investment spending needs of borrowers. a lending agreement between an individual lender and an individual borrower. Loans are usually tailored to the individual borrower’s needs and ability to pay but carry relatively high transaction costs. a claim on a bank that obliges the bank to give the depositor his or her cash when demanded. a claim on a tangible object that can be used to generate future income. a financial intermediary that sells policies guaranteeing a payment to a policyholder’s beneficiaries when the policyholder dies. describes an asset that cannot be quickly converted into cash with relatively little loss of value. a requirement to pay income in the future. a principle of asset price determination that holds that asset prices embody all publicly available information. The hypothesis implies that stock prices should be unpredictable, or follow a random walk, since changes should occur only in response to new information about fundamentals. assets created by pooling individual loans and selling shares in that pool. the expenses of negotiating and executing a deal. |