The Economy
The main driver of the economy
What is spending? (Transactions)
This individual is looking to loan out money
What is a lender/bank?
The trait of having a positive attitude
What is optimism?
The Central Bank does this to recover from a recession.
What is decreasing the interest rates? (To increase borrowing/credit/spending)
This ratio tells you the amount of debt being leveraged to maintain a company's assets.
What is the debt-to-equity ratio? D/E
An agreement to buy something and pay for it later with interest
What is credit/debt?
Without credit, this would be the only driver of income
What is productivity?
Entrepreneurs manage this to make profits
What is risk/failure?
The Central Bank does this to address inflation
What is increasing the interest rates? (Decreases borrowing/spending) (Causes Deflation)
Warren Buffet recommends this strategy for young investors.
What is holding stocks long-term? (5+ years)
This individual is looking to buy something that they cannot afford
What is a borrower?
Doing this creates cycles of spending more and less money/credit. On the individual level and all of society.
What is borrowing/lending?
Revenue minus expenses(including taxes and cost of goods sold)
What is net profit?
The Central Government can spend money on this to drive the economy, but the Central Bank cannot
What are goods and services, and benefits?
This general rule stops us from comparing apples to oranges with investing.
What is comparing stocks within the same field/sector?
Credit cannot settle a transaction, only this can
What is money?
The initial amount of credit/debt that interest will be accrued on.
What is the principal?
What are the things that an entrepreneur is always doing?
The Central Bank can't lower interest rates to get out of a deleveraging/depression for this reason
This go-between organization lets ordinary investors place buy/sell orders in the stock market
What are the parts of the economic model?
The Central Bank can only invest in these things
What are financial assets and government bonds?
Entrepreneurs coordinate these three things to manage risk and address a need
What are labor, resources, and capital?
After a recession, deleveraging, and full on depression (like 1929 or 2008), this is the only way for the Central Bank to give the Central Government money
What is printing more money and investing it in government bonds?
If buying a share of stock is buying a piece of a company. Then buying a share of an ETF or index fund is...