Factor endowments – The initial quality and quantity of the
land, labor, and natural capital of a given country.
Factor markets – Markets where factors of production are
bought and sold (land, labor, capital, etc.)
Factors of production – The productive resources that are
used as inputs in the production of goods and services. The four factors of production are land,
labor, capital and entrepreneurship.
Favored customers – Customers who receive special treatment
from firms during situations of excess demand or a shortage.
Federal Budget – A yearly statement of the revenues and
expenses of the federal government. The
document will show the surplus or deficit of the budget if one exists.
Federal debt – The total amount owed by the federal
government.
Federal deficit – Federal government receipts minus
expenditures (if negative).
Federal funds rate – The interest rate at which banks can
borrow and lend reserves to each other.
Federal open market committee – The Federal Reserve’s main
policy making committee responsible for the open market operations.
Federal Reserve System (Bank) – Commonly referred to as the
FED, it is essentially the central bank for the United States.
Federal surplus – Federal government receipts minus
expenditures (if positive).
Fertility rate – The birth rate.
Fiat money – Objects that are money because of laws enforced
by governments that make them money.
Final good or service – A good or service that is produced
for its final user and is not an intermediate good in the production of another
good or service.
Financial intermediaries – Banks and other institutions that
act as a link between those who lend and want to borrow money.
Fine-tuning – A Keynesian style belief that the government
is able to control inflation and unemployment.
Firms – Commonly called businesses, these are institutions
that organize the production of goods and services.
Fiscal drag – The negative effect on the economy that occurs
when tax rates increase because people have moved into a higher tax bracket
when earning more money.
Fiscal policy – Policies used by the federal government to
stimulate or slow down the economy.
Includes the changing of taxes, transfer payments, and government
expenditures on goods and services produced in the economy. The goal of fiscal policy is usually to spur
economy growth during a downturn (shift AD right), or slow down the economy
during high inflation (shit AD left).
Fiscal stimulus – An increase in government spending or a
decrease in tax revenues with the goal to increase real GDP (shift AD right).
Fixed-weight procedure – A procedure that uses weights from
a given base year.
Floating exchange rates (also called market exchange rates)
– When exchange rates are determined by the forces of supply and demand and are
free from fixing or regulation.
Foreign direct investment – Investment in firms in a
particular country by individuals who are citizens of another country.
Foreign exchange – All currencies other than the domestic
currency for a particular country.
Four-firm concentration ratio – The percentage of the total
revenue in an industry accounted for by the four largest firms within that
industry.
Free enterprise – The freedom of individuals to start and
operate a private business with the intent of earning a profit.
Frictional unemployment – The unemployment that occurs from
people leaving and joining jobs and the labor force. Frictional unemployment exists because it is
impossible to instantly begin a job when you do not have one. For example, if you graduate or quit a job to
find a better job, you are frictionally unemployed. Things like increased labor mobility (people
moving) or assistance in finding jobs (like the internet or unemployment
offices) can decrease frictional unemployment.
Full employment – When there is no cyclical unemployment or
all unemployment is caused by frictional, seasonal and structural unemployment.
Full-employment equilibrium – When equilibrium real GDP is
equal to potential GDP.
Full-time workers – The people who work 35 or more hours per
week.
Functional distribution of income – The distribution of
income among the factors of production (land, labor, capital and
entrepreneurship).
