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private property
property owned by individuals or companies, not by the government or the people as a whole
Entrepreneurship
the process of starting, organizing, managing, and assuming the responsibility for a business
Rule of Law
principle that the law applies to everyone, even those who govern
Institutions of Capitalism
Private property, markets, entrepreneurship, rule of law
Markets
Bring buyers and sellers together to exchange goods and services
command economy
An economic system in which the government controls a country's economy.
market economy
an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services
mixed economy
An economy in which private enterprise exists in combination with a considerable amount of government regulation and promotion.
money supply
the total value of financial assets in the economy that are considered money
Liquidity
the ease with which an asset can be converted into cash
Mutual funds
An investment that holds a wide range of different investment instruments, providing diversification
fractional reserve banking
a banking system that keeps only a fraction of its funds on hand and lends out the remainder
default
failure to pay back a loan
mortgage
a specific type of loan that is used to buy real estate
credit card
A plastic card used to make purchases now and pay for them later.
interest
A sum paid or charged for the use of money or for borrowing money
principal
The amount of money borrowed
monetary policy
managing the economy by altering the supply of money and interest rates
reserve requirement
the percentage of deposits that banking institutions must hold in reserve
check clearing
the process by which banks record whose account gives up money and whose account receives money when a customer writes a check
bank holding company
a corporation that owns banks
federal funds rate
the interest rate at which banks make overnight loans to one another
discount rate
The interest rate on the loans that the Fed makes to banks
store-value cards
Cards that are prepaid, providing the card holder with immediate money
Investing
The process of setting money aside to increase wealth over time for long-term financial goals such as retirement
financial system
the group of institutions in the economy that help to match one person's saving with another person's investment
financial assets
claims on real assets or the income generated by them
liability
an amount owed
financial intermediaries
financial institutions through which savers can indirectly provide funds to borrowers
hedge fund
A private investment organization that employs risky strategies that often made huge profits for investors
Diversification
Spreading out investments to reduce risk
portfolio
A collection of financial assets
prospectus
an investment report to potential investors
Note 
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