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ZERO-SUM GAME: A situation in which a fixed amount is divided up among the winners and losers. In a zero-sum game the wins equal the losses. Many stock market, or financial market, exchanges are zero-sum. One person buys low and sells high, while another buys high and sells low. The wealth in such transactions are merely transferred from one person to another. "Productive" market transactions, in contrast, are not zero-sum. The act of producing goods and services from resources that are consumed to satisfy wants and needs results in a net gain to society.
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Lesson Contents
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Unit 1: What It Is |
Unit 2: Banking Details |
Unit 3: Reserve Banking |
Unit 4: Regulating Banks |
Unit 5: The Economy |
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Banking
In this lesson, we take a look at the role banking plays in the macroeconomy. Banking is most important to the study of macroeconomics because a substantial fraction of the economy's money supply is under the direct control of commercial banks (as opposed to government). Because government needs to control the money supply to promote business-cycle stability, they need to control banks control of the money supply. As such, we need to take a look at how banks operate, including how they issue the deposits that make up the money supply. - The first unit opens this lesson with an overview of banks and the banking system, including their role as financial intermediaries.
- Moving into the second unit, we take a closer look at the banking system, especially the four basic types of banks (banks, savings and loans, credit unions, and mutual savings banks) and the assorted assets and liabilities of a typical bank.
- The key banking principle -- fractional-reserve banking -- is then discussed in the third unit with a little story about Fred the Goldsmith.
- The fourth unit of this lesson discusses the why, how, and who of bank regulation.
- The fifth and final unit then examines the benefits and problems of fractional-reserve banking for the macroeconomy.
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AGGREGATE DEMAND CURVE A graphical representation of the relation between aggregate expenditures on real production and the price level, holding all ceteris paribus aggregate demand determinants constant. The aggregate demand (AD) curve is one side of the graphical presentation of the aggregate market. The other side is occupied by the long-run aggregate supply curve and/or the short-run aggregate supply curve. The negative slope of the aggregate demand curve captures the inverse relation between aggregate expenditures on real production and the price level. This negative slope is attributable to the interest-rate, real-balance, and net-export effects.
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BEIGE MUNDORTLE [What's This?]
Today, you are likely to spend a great deal of time flipping through the yellow pages seeking to buy either a coffee cup commemorating next Thursday or a replacement remote control for your stereo system. Be on the lookout for strangers with large satchels of used undergarments. Your Complete Scope
This isn't me! What am I?
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General Electric is the only stock from the original 1896 Dow Jones Industrial Average remaining in the current index.
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"The greatest things ever done on Earth have been done little by little. " -- William Jennings Bryan
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FRB Federal Reserve Board
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