The national and international economy Key Terms

Commercial Banks

Financial institutions that accept deposits from the public and provide loans for personal and business purposes.

Investment Banks

Financial institutions that specialize in raising capital, underwriting securities, and providing advisory services for corporate transactions.

Central Bank

An institution that manages a country's currency, money supply, and interest rates.

Monetary Policy

The process by which a central bank controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.

Financial Regulation

The oversight and control of financial institutions and markets to ensure stability, transparency, and consumer protection.

Monetary Policy

The process by which a central bank manages the supply of money and interest rates to achieve macroeconomic objectives.

Aggregate Demand

The total demand for goods and services within an economy at a given overall price level and in a given time period.

Public Debt

The total amount of money that a government owes to creditors, often resulting from borrowing to finance budget deficits.

Supply-side policies

Economic policies aimed at increasing the supply of goods and services through incentives for production.

Deregulation

The reduction or elimination of government rules controlling how businesses can operate, intended to promote competition and efficiency.

Globalization

The process of increasing economic interdependence among countries, characterized by the flow of goods, services, capital, and labor across borders.

Trade Liberalization

The removal or reduction of trade barriers, such as tariffs and quotas, to encourage free trade between countries.

Comparative Advantage

The ability of a country to produce a good at a lower opportunity cost than another country, leading to specialization and trade.

Tariff

A tax imposed on imported goods, often used to protect domestic industries by making foreign products more expensive.

Current Account

A component of the balance of payments that records a country's transactions involving goods, services, income, and current transfers.

Capital Account

A component of the balance of payments that records capital transfers and the acquisition/disposal of non-produced, non-financial assets.

Exchange Rate

The price of one currency in terms of another currency.

Pegged Currency

A currency that is tied to another major currency to stabilize its value.

Gross Domestic Product (GDP)

The total monetary value of all final goods and services produced within a country's borders in a specific time period.

Sustainable development

Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.