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PREMIUM: In financial terms, a bond or similar financial asset that sells above its face value. A premium is paid to equalize a bond's interest rate with comparable interest rates. For example, a $100,000 bond that pays a fixed 10 percent interest on the face value ($10,000) would be sell at a premium of $125,000 if comparable interest rates were 8 percent. As such, the $10,000 interest works out to be 8 percent of the $125,000 price.
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Lesson 5: Demand | Unit 2: Law of Demand
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Page: 7 of 20
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Topic:
Substitution Effect
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The second reason for the law of demand is the substitution effect.- The substitution effect exists because a change in the price of a good makes this price relatively higher or lower than the prices of other goods.
- The higher the price of a good, then the more expensive it is relative to other goods. The lower the price of a good, then the less expensive it is relative to other goods.
- Other prices remain unchanged.
- The substitution effect is usually more important than the income effect.
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BANK RESERVES Assets used by banks to back up deposits and to conduct daily transactions, including withdrawing funds, "cashing" checks, and transferring funds between banks to "clear" checks. Reserves, also termed bank reserves or legal reserves, includes two types of assets: vault cash and Federal Reserve deposits. These legal reserves are then divided between require reserves and excess reserves. Required reserves are used to back up deposits and excess reserves are used for loans.
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BROWN PRAGMATOX
[What's This?]
Today, you are likely to spend a great deal of time flipping through mail order catalogs looking to buy either a rechargeable battery for your camera or a coffee cup commemorating the first day of spring. Be on the lookout for rusty deck screws.
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Two and a half gallons of oil are needed to produce one automobile tire.
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"The time to repair the roof is when the sun is shining." -- John F. Kennedy, 35th U. S. president
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FRB
Federal Reserve Board
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