ECON 102 Chapter Notes - Chapter 10: Keynesian Cross, Inventory Investment, Consumption Function
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ECON 102 Full Course Notes
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Document Summary
Wealth - value of a household"s accumulated savings. Financial asset - paper claim that entitles the buyer to future income from the seller. Physical asset - tangible object that can be used to generate future income. Liability - requirement to pay income in the future. Transaction costs - expenses of negotiating and executing a deal. Financial risk - uncertainty about future outcomes that involve financial losses or gains. Diversification - when an individual invests in several different things so that possible losses are independent events. Liquid asset - asset that can be quickly converted into cash with relatively little loss of value. Illiquid asset - asset that cannot be quickly converted into cash with relatively little loss of value. Loan - lending agreement between an individual lender and an individual borrower. Default - occurs when a borrower fails to make payments as specified by the loan or bond contract.
