The theory that differences in factor endowments among countries result in different opportunity costs; countries have comparative advantages in the production of commodities that are intensive in the use of the factors of production with which their endowments are relatively abundant.
Factors of Production
Productive resources; what is required to produce the goods and services that people want; natural resources, human resources, capital goods and entrepreneurship.
The taxing and spending plan of the national government.
Federal Deposit Insurance Corporation (FDIC)
A federal agency that guarantees depositors’ savings up to $100,000 per account in most commercial banks, savings banks, and savings associations. The FDIC was established by the federal government in 1933 after the bank failures of the Great Depression.
Federal Income Tax
A tax paid by individuals and businesses to the federal government to fund such services as national defense, human services, and the monitoring and regulation of trade.
The central bank of the United States. Also called the Fed. Its main function is controlling the money supply through monetary policy. (See also Monetary policy.)
Federal Reserve Structure
The structure of the Federal Reserve revolves around a Board of Governors. There are seven (7) members on the Board of Governors appointed to one fourteen (14) year term by the President. Two appointees are designated by the President as Chairman and Vice-Chairman and are subsequently confirmed by the Senate to four (4) year terms. Only one person from the twelve (12) Federal Reserve districts is only allowed appointment to the Board.
The total cost of credit, including interest and transaction fees.
Someone who creates or devises a new process, application, machine, or article of application.
Setting short-, medium- and long-range goals; then collecting and analyzing income and expenditure information to determine how to meet one's goals.
The chance that an individual, business, or government will not be able to return money invested.
Economic units that demand productive resources from households and supply goods and services to households and government agencies.
Changes in the expenditures or tax revenues of the federal government, undertaken to promote full employment, price stability and reasonable rates of economic growth.
Fixed Costs (FC)
Costs of production that do not change as a firm's output level changes; costs that must be paid whether the firm produces or not.
Fixed Exchange Rate
An exchange rate that is set and therefore prevented from rising or falling with changes in supply and demand for a nation's currency.
Expenditures that are the same from week to week or month to month, such as mortgage or rent payments and car payments.
Income that stays the same from week to week or month to month. Usually refers to income from pensions or bonds.
Flexible (Floating) Exchange Rate
An exchange rate that is determined by the international demand for and supply of a nation's money; a rate free to rise or fall (to float).
Foreign Exchange Market
The market where the demand for and supply of foreign currencies determines exchange rates.
The purchase of financial and/or physical assets in one county by businesses or people in another county. This term can refer to either foreign direct investment or investment in foreign financial assets, such as stocks.
Fractional Reserve Banking System
A system in which banks are required to hold only a specified fraction of their deposits available for withdrawal by depositors. The rest may be lent out, thus "creating money."
Wrongful or criminal deception intended to manipulate a person for the purpose of gain, usually financial.
The chance that an investment has been misrepresented.
The voluntary exchange of goods and services in the absence of trade barriers and restrictions.
Unemployment caused by the short-term movement of people between jobs and by first-time job seekers entering the labor force; always present in a dynamic economy.
The natural rate of employment; generally considered to be about 93-95 percent of the labor force, allowing for frictional unemployment of 5-7 percent.
Essentially, distribution between different groups.
Functional Distribution of Income
The division of an economy's total income into wages and salaries, rent, interest, and profit; shows the breakdown of income received by individuals and businesses based on the type of resources provided to the productive process.
Functions of Money
Practical uses or purposes served by money; what it does for us. Money serves as a medium of exchange (we can use it to pay for things we buy), a standard of value (prices expressed in dollar amounts tell us how much one thing is worth compared to another), and a store of value (money retains its value over time; we can save it now and use it later).
The ability to produce more units of a good or service than some other producer, using the same quantity of resources.
Costs and/or benefits of a choice that will be paid or gained at a later time.