ECON 203 TEST 2 MATTHEWS OLE MISS || A+ Guaranteed.
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Course
ECON 203 T
Institution
ECON 203 T
Liquidity correct answers the ease with which an asset can be converted into the economy's medium of exchange
Commodity Money correct answers money that takes the form of a commodity WITH intrinsic value (has value even if it were not used as money)
- ex: gold
M1 = correct answers - currency...
ECON 203 TEST 2 MATTHEWS OLE MISS || A+
Guaranteed.
Liquidity correct answers the ease with which an asset can be converted into the economy's
medium of exchange
Commodity Money correct answers money that takes the form of a commodity WITH intrinsic
value (has value even if it were not used as money)
- ex: gold
Productivity correct answers the quantity of goods and services produced from each unit of labor
Determinants of Productivity correct answers - physical capital
- human capital
- natural resources
- technological knowledge
Physical Capital correct answers the stock of equipment and structures that are used to produce
goods & services
- physical capital is a produced factor of production (capital is an input)
Diminishing Returns correct answers the property whereby the benefit from an extra unit of an
input declines as the quantity of the input increases
- when workers have a large quantity of capital to use in producing goods and services, giving
them an additional unit go capital increases their productivity only slightly
- increase in the saving rate leads to higher growth only for awhile
, Catch-Up Effect correct answers the property whereby countries that start off poor tend to grow
more rapidly than countries that start off rich
GDP correct answers measures income earned within a country by residents and nonresidents
- Foreign investment increases the income of residents and nonresidents (but does not directly
impact residents abroad), thus it has a greater impact on GDP than on GNP.
GNP correct answers measures income earned by residents at home and abroad.
Financial System correct answers group of institutions in the economy that help to match one
person's saving with another person's investment
Market for Loanable Funds correct answers the market in which those who want to save supply
funds and those who want to borrow to invest demand funds
Closed Economy correct answers - an economy that doesn't interact with other economies
- doesn't engage in international trade in goods and services or international borrowing and
lending
Financial Markets correct answers Financial institutions through which savers can directly
provide funds to borrowers.
Bond correct answers a certificate of indebtedness
Date of Maturity correct answers time at which the loan will be repaid
Stock correct answers a claim to partial ownership in a firm
Equity Finance correct answers the sale of stock to raise money
Debby Finance correct answers sale of bonds to raise money
Stock Index correct answers an average of a group of stock prices
- most famous- dow jones industrial average
- because stock prices reflect expected profitability, these stock indexes are watched closely as
possible indicators of future economic conditions
Financial Intermediaries correct answers financial institutions through which savers can
indirectly provide funds to borrowers
The equilibrium interest rate correct answers Determined by the intersection of the supply and
demand curves in the market for loanable funds.
- Saving makes up the supply of loanable funds; therefore, an increase in saving shifts the supply
curve for loanable funds to the right. This drives the equilibrium interest rate down
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