Factors of production
-
The economy's factors of production are land,
labor, capital,
and entrepreneurship. Factors of
production are also called "productive resources" or "resources".
Fallacy of composition
-
The erroneous view that what is good or true for the individual is
necessarily good or true for the group.
Federal budget
-
The federal budget is a statement of the federal government's financial
plan, itemizing programs and their costs, tax revenues, and the proposed
deficit or surplus.
Federal Deposit Insurance Corporation (FDIC)
-
An independent deposit insurance agency created by Congress in 1933 to
maintain stability and public confidence in the nation's banking system.
The FDIC promotes safety and soundness of insured depository
institutions and the U.S. financial system by identifying, monitoring,
and addressing risks to the deposit insurance funds; minimizes
disruptive effects from the failure of banks and savings associations;
and ensures fairness in the sale of financial products and provision of
financial services.
Federal funds
-
Short-term transactions in immediately available funds between depository institutions and certain other
institutions that maintain accounts with the Federal Reserve; usually not collateralized.
Federal funds rate (funds rate)
-
The interest rate at which banks borrow surplus reserves and other
immediately available funds. The federal funds rate is the shortest
short-term interest rate, with maturities on federal funds concentrated in overnight or
one-day transactions.
Federal Home Loan Bank Board (FHLBB)
-
The agency of the federal government that supervises all federal savings
and loan associations and federally insured state-chartered savings and
loan associations. The FHLBB also operates the Federal Savings and Loan
Insurance Corporation, which insures accounts at federal savings and
loan associations and those state-chartered associations that apply and
are accepted. In addition, the FHLBB directs the Federal Home Loan Bank
System, which provides a flexible credit facility for member savings
institutions to promote the availability of home financing. The FHL
Banks also own the Federal Home Loan Mortgage Corporation, established
in 1970 to promote secondary markets for mortgages.
Federal Open Market Committee (FOMC)
-
The main policy-making organ of the Federal Reserve
System. The FOMC is a twelve-member committee made up of the seven
members of the Board of Governors; the president of the Federal Reserve
Bank of New York; and, on a rotating basis, the presidents of four other
Reserve Banks. The FOMC meets eight times a year to set Federal Reserve
guidelines regarding the purchase and sale of government securities in
the open market as a means of influencing the volume of bank credit and
money in the economy. It also establishes policy relating to System
operations in the foreign exchange rates.
Federal Reserve Act of 1913
-
Federal legislation that established the Federal
Reserve System.
Federal Reserve Bank
-
One of the twelve operating arms of the Federal
Reserve System, located throughout the nation, that together with
their twenty-five Branches carry out various System functions, including
operating a nationwide payments system, distributing the nation's
currency and coin, supervising and regulating member banks and bank
holding companies, and serving as banker for the U.S. Treasury.
Federal Reserve notes
-
Nearly all of the nation's circulating paper currency consists of
Federal Reserve notes printed by the Bureau of Engraving and Printing
and issued to the Federal Reserve Banks to put into circulation through
commercial banks and other depository institutions. Federal Reserve
notes are obligations of the U.S. government.
Federal Reserve System
-
The central bank of the United States, created by Congress in 1913 and
made up of a seven-member Board of Governors in Washington, DC, twelve
regional Federal Reserve Banks, and their
twenty-five Branches
Feedback-rule policy
-
A rule that specifies how policy actions respond to changes in the state
of the economy.
Fiat money
-
Money that has little or no intrinsic value
as a commodity; it is costless to produce, usually taking the form of
tokens or pieces of paper, and is not redeemable for any commodity.
Financial innovation
-
Financial innovation is the development of new financial products -- new
ways of borrowing and lending.
Financial institution
-
An institution that uses its funds chiefly to purchase financial assets
(loans, securities) as opposed to tangible property. Financial
institutions can be classified according to the nature of the principal
claims they issue. See also depository institution.
Financial intermediary
-
A firm that takes deposits from households and firms and makes loans to
other households and firms.
Financal market
- A market that trades financial assets. Financial assets are the legal claims on the real assets in our economy and include such notable items as corporate stocks and bonds, government securities, and money. Examples of financial markets are stock markets, bond markets, commodity exchanges, the so-called open market (which trade government securities), and markets that trade futures and options. Other less formal transactions are also considered part of our array of financial markets. All of the lending and borrowing that consumers, business, and banks do through the banking system is a part. Insurance, as a legal claim on an uncertain future, is yet another dimension of financial markets. And not to be overlooked, foreign exchange markets are critical financial markets for anyone engaging in the exciting world of foreign trade. Without financial markets our economy would find it almost impossible to accumulate the funds needed for investment in big, expensive capital projects.
Fiscal policy
-
Fiscal policy is the government's attempt to influence the economy by
setting and changing taxes, its purchases of goods and services, and
transfer payments to achieve macroeconomic objectives such as full
employment, sustained long-term economic growth, and low inflation.
Fisher effect
-
An increase in expected inflation causes a proportional increase in
the market interest rate so that the expected real rate of interest
remains unchanged.
Fixed exchange rate system
-
Exchange rates between currencies that
are set at predetermined levels and don't move in response to changes in
supply and demand. Contrast with floating
exchange rate system.
Fixed-rule policy
-
A rule that specifies an action to be pursued independently of the state
of the economy.
Floating exchange rate system
-
The flexible exchange rate system in which the exchange rate is determined by the market
forces of supply and demand without intervention. Contrast with fixed exchange rate system.
Flow
-
A quantity per unit of time.
Foreign exchange desk
-
The foreign exchange trading desk at the New York Federal Reserve Bank.
The desk undertakes operations in the exchange markets for the account
of the Federal Open Market Committee, and acts
as agent for the U.S. Treasury and for foreign central banks.
Foreign exchange market
-
The foreign exchange market is the market in
which the currency of one country is exchanged for the currency of
another.
Foreign exchange rate
-
The foreign exchange rate is the price
at which one currency exchanges for another.
Foreign purchase effect
-
The foreign purchase effect is the inverse relationship between the
net exports of an economy and its price level relative to foreign price levels.
Forward exchange
-
A type of foreign exchange transaction whereby a contract is made to
exchange one currency for another at a fixed date in the future at a
specified exchange rate. By buying or
selling forward exchange, businesses protect themselves against a
decrease in the value of a currency they plan to sell at a future
date.
Four-firm concentration ratio
-
A measure of market power that is
calculated as the percentage of the value of sales accounted for by the
four largest firms in an industry.
Fractional-reserve banking
-
A banking system in which banks hold only a fraction of deposits as
reserves.
Free rider
-
A person who consumes a good without paying for it.
Frictional unemployment
-
Frictional unemployment is the unemployment that arises from normal
labor turnover -- people entering and leaving the labor force and from
ongoing creation and destruction of jobs. Generally, frictional
unemployment tends to be shorter-term in nature. Contrast with structural unemployment.
Friedman's law
-
Inflation follows excessive monetary growth with a long (about two
years) and variable lag: or the rate of price change follows the rate of
monetary growth.
Fringe benefits
-
Compensation that a worker receives excluding direct money payments for
time worked, such as insurance, retirement benefits, vacation time,
maternity and sick leave, etc.
Full employment
-
Full employment is a situation in which the quantity of labor demanded
equals the quantity supplied. At full employment, the unemployment rate
equals the natural rate of unemployment and all unemployment is
frictional and structural.
Funds rate
-
See federal funds rate.