Inflation
This term describes a sustained increase in the overall price level of goods and services in an economy over time.
What is inflation?
Money must retain its value over time to be effective in this role.
What is a store of value?
This economic strategy, used by central banks like the Federal Reserve, involves managing interest rates and the money supply to achieve price stability, full employment, and economic growth.
What is monetary policy?
This type of investment represents partial ownership in a company and may pay dividends to shareholders.
What is a stock?
This is the form employees in the U.S. complete to determine the amount of taxes withheld from their paycheck.
What is a W-4 form?
When inflation is extremely high and out of control, leading to a collapse in the value of currency, it is called this.
What is hyperinflation?
Historically, this type of money, such as gold or silver, derives its value from the material it is made of.
What is commodity money?
This is the rate at which banks lend to each other overnight, often influenced by central bank policies.
What is the federal funds rate?
This strategy involves spreading your investments across different asset classes to reduce risk.
What is diversification?
This type of loan, often secured by property, is used to buy a home and typically requires monthly payments.
What is a mortgage?
Central banks, like the Federal Reserve, often increase this to combat high inflation by reducing consumer spending and investment.
What is the interest rate?
For money to be useful, its supply must be controlled, giving it this quality.
What is scarcity?
This is the interest rate at which commercial banks borrow reserves from the central bank.
What is the discount rate?
This type of fund is designed to match the performance of a market index, offering diversification and low costs.
What is an index fund?
This three-digit number reflects your creditworthiness and is a key factor in loan approval and interest rates.
What is a credit score?
This measure tracks the average change in prices over time for a basket of goods and services purchased by households.
What is the Consumer Price Index (CPI)?
This type of money has no intrinsic value but is used as currency because a government declares it legal tender.
What is fiat money?
When a central bank lowers interest rates or increases the money supply to stimulate the economy, it is engaging in this type of policy.
What is expansionary monetary policy?
2 Reasons why people buy stocks:
1. Potential for an investment's value to increase over time.
2. Portion of a company's profits distributed to shareholders, often in cash.
What is capital appreciation (gains) and dividends?
This form, typically issued by employers, reports annual income and taxes withheld for an employee.
What is a W-2 form?
Economists attribute this to the main reason societies experience long term inflation.
What is expansion of the money supply.
In economics, money serves as a medium of exchange, a store of value, and this third function.
Answer: What is a unit of account?
What is a unit of account?
This type of monetary policy aims to reduce inflation by raising interest rates or decreasing the money supply.
What is contractionary monetary policy?
This type of account is used for saving for retirement and often comes with tax advantages, like a 401(k) or an IRA.
What is a retirement account?
This federal insurance program protects depositors' funds in banks up to a certain limit.
What is FDIC insurance?