Session:3 Economic Foundations: Money and Rates
Key Terms
Principles of Finance | Leadership Development – Micro-Learning Session
Rice University 2020 | Michael Laverty, Colorado State University Global Chris Littel, North Carolina State University| https://openstax.org/details/books/principles-finance
- business cycle
- a period of economic expansion followed by economic contraction
- ceteris paribus
- holding all other things constant
- consumer price index (CPI)
- a measure of inflation based on the cost of a market basket of goods that a typical urban family of four might purchase
- core inflation index
- a measure of inflation that removes food and energy prices from the CPI
- demand
- the quantity of a good or service that consumers are willing and able to purchase during a given time period, ceteris paribus
- economic exposure
- the risk that a change in exchange rates will impact a business’s sales and number of customers
- equilibrium
- the point at which the demand and supply curves for a good or service intersect
- equilibrium price
- the price at which quantity demanded equals quantity supplied
- expansion
- the part of the business cycle in which GDP is growing
- GDP deflator
- a measure of inflation tracked by the Bureau of Economic Analysis, intended to measure what GDP would be if prices did not change from one year to the next
- gross domestic product (GDP)
- the market value of all goods and services produced within an economy during a year
- inflation
- a general increase in prices
- law of demand
- the principle that the quantity of purchases varies inversely with price; the higher the price, the lower the quantity
- macroeconomics
- the study of the economy as a whole, focusing on unemployment, inflation, and total output
- microeconomics
- the study of the economy at the individual level, focusing on how individuals and businesses choose to allocate scarce resources
- nominal interest rate
- the quoted or stated interest rate
- producer price index (PPI)
- a measure of the prices that producers of goods and services pay for their supplies and raw materials
- real interest rate
- the nominal interest rate minus the rate of inflation
- recession
- the part of the business cycle characterized by contraction
- spot exchange rate
- the price to immediately buy one currency in terms of another currency
- supply
- the quantity of a good or service that firms are willing to sell in the market during a given time period, ceteris paribus
- transaction exposure
- the risk that the value of a business’s expected receipts or expenses will change as a result of a change in currency exchange rates
- translation exposure
- the risk that a change in exchange rates will impact the financial statements of a company
- unemployed
- members of the labor force who are not currently working but are actively seeking a job