Economics and Personal Finance Review Flashcards

Vocabulary-style flashcards covering basic economic concepts, financial institutions, trade, and personal finance based on the lecture notes.

M1

Money you can use immediately, including cash, coins, and checking accounts

M2

M1 plus savings, which includes savings accounts and other "near-money" assets

Liquidity

How easily something can be turned into cash

Durable

A characteristic of money meaning it doesn't wear out easily

Portable

A characteristic of money meaning it is easy to carry

Divisible

A characteristic of money meaning it can be split into smaller units

Uniform

A characteristic of money meaning all units look the same

Limited in supply

A characteristic of money meaning it is not unlimited

Accepted

A characteristic of money meaning people agree to use it

Fiat money

Money that has value because the government says so

Commodity money

Money that has value on its own, such as gold or cattle

Representative money

Money that stands for something valuable

Barter

Trading without money

Mortgage

A loan for buying a house

Interest

The cost of borrowing or the reward for saving

Stock

Ownership in a company

Stock market

A system for buying and selling shares

The Dow

A stock index made up of $30$ major U.S. companies

S&P500

A stock index that tracks $500$ large U.S. companies

Comparative advantage

Producing at a lower opportunity cost

Imports

Goods brought in

Exports

Goods sent out

Free trade

Trade with no restrictions

Tariff

A tax on imports

Quota

A limit on imports

Embargo

A complete ban on trade

Trade war

A situation where countries are raising tariffs on each other

Trade agreements

Cooperation between countries regarding trade

Monetary policy

Policy controlled by the Federal Reserve involving interest rates and money supply

Fiscal policy

Policy controlled by Congress and the President involving government spending and taxes

Keynesian economies

The theory that the government should help during recessions

Developed countries

Countries with high income, advanced technology, and strong industry

Credit score

A measurement of how reliable you are with debt

Budget

A plan for income and expenses

Compound interest

Interest earned on previous interest