The Economy & Market Forces
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Terms in this set
- Monetary Policy & the Fed The Federal Reserve's management of money supply and credit conditions — chiefly through open-market operations set by the FOMC, the discount rate, and reserve requirements — to pursue stable prices and full employment.
- Fiscal Policy Government taxing and spending decisions made by Congress and the President to influence the economy — the Keynesian counterpart to the Fed's monetary policy.
- The Business Cycle The economy's recurring sequence of expansion, peak, contraction, and trough; a recession is commonly defined as two or more consecutive quarters of declining GDP.
- Economic Indicators Statistics classified by their timing relative to the business cycle: leading indicators predict turns, coincident indicators confirm the current phase, and lagging indicators confirm a turn after it happens.
- The Yield Curve A plot of bond yields against maturities for bonds of the same credit quality; normally upward-sloping because lenders demand more yield to commit money for longer.
- Market Indices Benchmarks that track a basket of securities: the price-weighted Dow Jones Industrial Average (30 large companies), the market-cap-weighted S&P 500, the tech-heavy Nasdaq Composite, and the small-cap Russell 2000.
- Clearing & Settlement The post-trade process of matching, guaranteeing, and completing transactions; regular-way settlement for stocks, corporate bonds, and municipal bonds is T+1 — one business day after the trade.