Savings–investment spending identity Budget surplus Budget deficit Budget balance National savings Loanable funds market Crowding out Fisher effect Present value Net present value Wealth Financial asset Physical asset Liability Transaction costs Financial risk Diversification Liquid Illiquid Default Loan-backed securities Financial intermediary Mutual fund Pension fund Life insurance company Bank deposit Bank | assets created by pooling individual loans and selling shares in that pool. a paper claim that entitles the buyer to future income from the seller. Loans, stocks, bonds, and bank deposits are types of financial assets. a type of mutual fund that holds assets in order to provide retirement income to its members. describes an asset that can be quickly converted into cash without much loss of value. the expenses of negotiating and executing a deal. the present value of current and future benefits minus the present value of current and future costs. the sum of private savings and the government’s budget balance; the total amount of savings generated within the economy. the negative effect of budget deficits on private investment, which occurs because government borrowing drives up interest rates. an accounting fact that states that savings and investment spending are always equal for the economy as a whole. (of a household) the value of accumulated savings. a claim on a bank that obliges the bank to give the depositor his or her cash when demanded. describes an asset that cannot be quickly converted into cash without much loss of value. 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. uncertainty about future outcomes that involve financial losses and gains. a financial intermediary that sells policies guaranteeing a payment to a policyholder’s beneficiaries when the policyholder dies. a requirement to pay income in the future. the difference between tax revenue and government spending when tax revenue exceeds government spending. a hypothetical market in which the demand for funds is generated by borrowers and the supply of funds is provided by lenders. The market equilibrium determines the quantity and price, or interest rate, of loanable funds. investment in several different assets with unrelated, or independent, risks, so that the possible losses are independent events. 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. 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 failure of a borrower to make payments as specified by the bond contract. the difference between tax revenue and government spending when government spending exceeds tax revenue. the amount of money needed at the present time to produce, at the prevailing interest rate, a given amount of money at a specified future time. 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. the principle by which an increase in expected future inflation drives up the nominal interest rate, leaving the expected real interest rate unchanged. a claim on a tangible object that gives the owner the right to dispose of the object as he or she wishes. |
Savings–investment spending identity
Budget surplus
Budget deficit
Budget balance
National savings
Loanable funds market
Crowding out
Fisher effect
Present value
Net present value
Wealth
Financial asset
Physical asset
Liability
Transaction costs
Financial risk
Diversification
Liquid
Illiquid
Default
Loan-backed securities
Financial intermediary
Mutual fund
Pension fund
Life insurance company
Bank deposit
Bank