F
| Term | Definition |
|---|---|
| Factors of Production | The basic productive resources (labour, capital, and natural resources) that are essential inputs to every economic activity. |
| Federal Funds Rate | The target interest rate set by the Fed at which commercial banks borrow and lend their excess reserves to each other overnight. |
| Federal Open Market Committee (FOMC) | The twelve-member committee of the United States Federal Reserve that meets several times a year to decide the course of action for controlling the money supply of the United States. |
| Federal Reserve System | Often simply the Federal Reserve or the Fed. The central bank of the United States, created by Congress in 1913 and charged with the duty of regulating the money supply and monitoring its member banks. |
| Feudalism | A type of economy (such as that in Europe in the Middle Ages) that is primarily agricultural, supporting a class of artisans and merchants. Composed of two main social classes: nobles and peasants. The nobility extracted agricultural surplus from peasants through tradition, mutual obligation, and, if necessary, force. |
| Final Products | Products (goods or services) intended for final consumption, distinct from intermediate products used in the production of other goods. |
| Finance | Monetary purchasing power created by banks or financial institutions, enabling spending on major purchases by companies, households, or governments. |
| Financial Economics | The branch of economics focusing on monetary activities where money appears on both sides of a trade. |
| Financial Institution | A firm, such as a bank, involved in holding money for savers and lending money to borrowers. |
| Financial Markets | Markets where people trade property rights to assets (e.g., real estate or stocks) or where savers lend money to borrowers. |
| Financial Planning | A series of steps used by individuals or firms to achieve financial goals. |
| Financial Risk | The risk assumed by a saver or investor on future outcomes involving financial losses and gains. |
| Financial Transaction | An agreement or communication between a buyer and a seller to exchange an asset for payment. |
| Financialization | The trend, under neoliberalism, where real production is accompanied by an increasing degree of financial activity and intermediation, measured by the ratio of total financial assets to real capital assets in an economy. |
| Fiscal Policy | The use of government spending and taxation to influence the economy, aiming to achieve objectives like controlling inflation, boosting economic growth, or reducing unemployment. |
| Fixed Capital | Real capital permanently installed in a specific location, including buildings, infrastructure, and major machinery and equipment. |
| Fixed Costs | Costs that have to be paid even if a firm is not producing anything. |
| Flat-Rate Tax | A form of income tax where every taxpayer pays the same rate regardless of income level, in contrast to a progressive tax. |
| Foreign Direct Investment (FDI) | Investment by a company based in one country in an operating business located in another country, involving real physical capital assets. |
| Foreign Exchange | The process by which the currency of one nation is converted into the currency of another country. |
| Foreign Exchange Market | Also called Forex or FX. A global decentralized market for trading currencies, determining foreign exchange rates through buying, selling, and exchanging currencies at current or determined prices. It is the largest market in the world in terms of trading volume. |
| Formal Economy | The sector producing goods and services in return for monetary payment, fully integrated into formal economic structures, distinct from the informal economy. |
| Fractional Reserve System | A banking system where private banks must hold a specified proportion of assets on hand to support a larger amount of lending to customers. |
| Free Market | An economic system where prices for goods and services are self-regulated by the open market and consumers. It operates without government intervention, economic privilege, monopolies, or artificial scarcities, allowing supply and demand forces to set prices. |
| Free Trade | Trade between countries occurring with few or no trade barriers. |
| Free Trade Agreements | Agreements between countries eliminating tariffs, reducing non-tariff barriers, and ensuring liberalized, pro-business economic environments. |
| Frictional Unemployment | Unemployment resulting from workers moving between jobs, a normal part of a healthy labor market. |
| Full Employment | A condition where every willing worker can find a paying job within a short period, leading to near-zero unemployment. |
| Full Employment Output (Y*) | The amount of output produced in the economy when full employment exists in the labor market. |
| Future Value | The value of an asset at a specific date in the future, measuring the nominal future sum of money that a given sum of money is “worth” at a specified time, assuming a certain interest rate or rate of return. |
| Fiscal Policy | The use of government spending and taxation to influence the economy, to achieve economic objectives such as controlling inflation, boosting economic growth, or reducing unemployment. |
| Fixed Costs | Costs that do not vary with the level of production or output in the short run. They remain constant regardless of the quantity of goods or services produced. |
| Free Market | An economic system in which prices, production, and distribution of goods and services are determined by the forces of supply and demand in an open market, with minimal government intervention. |
| Factors of Production | Resources used in the production process, including land, labor, capital, and entrepreneurship. |
| Federal Reserve (Fed) | The central banking system of the United States responsible for conducting monetary policy, regulating and supervising banks, and maintaining the stability of the financial system. |
| Frictional Unemployment | Unemployment that occurs when workers are between jobs or in the process of searching for a new job. It is temporary and typically a normal part of a healthy labor market. |
| Fixed Exchange Rate | A system in which the value of a country’s currency is tied or pegged to the value of another major currency or a basket of currencies, with minimal fluctuations. |
| Foreign Direct Investment (FDI) | Investment made by a person, company, or entity from one country into business interests located in another country. |
| Free Trade | The policy of allowing the unrestricted flow of goods and services between countries without imposing tariffs, quotas, or other restrictions. |
| Fractional Reserve Banking | A banking system in which only a fraction of customer deposits are held as reserves, allowing banks to lend out the majority of the funds. |
| Fiscal Deficit | The difference between a government’s total revenue and its total expenditure when the latter exceeds the former. |
| Financial Market | A marketplace where buyers and sellers engage in the trade of financial assets such as stocks, bonds, currencies, and derivatives. |
| Fixed Exchange Rate System | A system in which the value of a country’s currency is pegged or fixed to the value of another currency or a basket of currencies, often maintained by the government or central bank. |
| Free Rider | A person or entity that benefits from a good or service without directly paying for it, leading to market inefficiencies and under-provision of public goods. |
| Full Employment | A situation in which all available labor resources are utilized, and the unemployment rate is at its natural rate, often considered an optimal state for the labor market. |
| Federal Budget | A government’s plan for its expenditures and revenues over a specific period, usually one fiscal year. |
| Foreign Exchange Market (Forex) | A global decentralized marketplace for the trading of currencies, where participants buy and sell various currencies based on exchange rates. |
| Fiscal Year | A 12-month accounting period used by governments and businesses for financial reporting and budgeting purposes, not necessarily coinciding with the calendar year. |
| Flexible Exchange Rate | A system where the value of a currency is determined by market forces of supply and demand without government intervention. |
| Forward Contract | An agreement between two parties to buy or sell an asset at a future date at a price agreed upon today. |