Economics Test 2 Supplement

Front 1

NASDAQ -

Back 1

The largest electronic exchange in the US

Front 2

New York Stock Exchange -NYSE -

Back 2

The largest and oldest stock exchange

Front 3

Dow Jones Industrial Index –

Back 3

a stock index which represents the US economy in the industry, transportation and utilities

Front 4

S&P 500 -

Back 4

Weighs the stocks of 500 top US companies

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Bull Market –

Back 5

extended period of time in which the market rises and the economy booms. A Bull (charging) market is good

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Bear Market –

Back 6

an extended period of time in which the market falls – usually unemployment is high and the economy is in recession. Bears hibernate. Bad market.

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Equilibrium-

Back 7

the place at which quantity demanded and quantity supplied are equal.

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Shortage –

Back 8

the situation in which the quantity demanded exceeds the quantity supplied at a given price

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Surplus –

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the quantity supplied of a good is greater than the quantity demanded at a given price

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Inflation -

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When the level of prices in the market rises because too much money is in circulation.

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Deflation -

Back 11

When prices decrease because the money seems more valuable and stable

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Legal Tender -

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Any form of money that has been declared a valid means of payment:- Every seller or creditor has to accept legal tender money in payment.

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Bullion –

Back 13

Gold, Silver or Platinum in the form of bars, ingots or plates.

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Federal Reserve

Back 14

The central bank in the US.

Front 15

The majority of America’s money supply is under the control of this central banking network called the ______ ______ ______

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Federal Reserve Bank.

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The Federal Reserve is able to increase or decrease the amount of money in circulation through its three main tools -.

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open market operations, reserve ratios, and discount rates

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Banks operate under a _______ _______ _________

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fractional reserve system

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fractional reserve system

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which means that banks are required to keep only a certain percentage of deposits and they are allowed to loan the rest out, thereby creating more money.

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Discount Rate -

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the rate of interest that the Fed's district banks charge commercial banks for borrowing money.

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Exchange Rates•

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An exchange rate is simply the cost of one form of currency in another form of currency.

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Non-durable goods –

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goods that have a life expectancy of less than three years.

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Durable goods –

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goods which are expected to last at least three years.

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What is called the Black Market.

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underground sale of items that the government does not know about.