Essential Financial and Economic Concepts Explained

Taxes

Payments required by law with no specific benefit the taxpayer receives in return.

Public Budgets

An annual financial document that determines the amount of money to be spent and provides income for those expenses. When referring to other entities, it is called a public budget.

Public Debt

The total amount of money owed by the government at a specific point in time, resulting from past borrowing or fiscal policies.

Fiscal Policy

A set of measures carried out by governments concerning public spending and taxes, aimed at facilitating economic growth, employment, price stability, and managing deficits.

Transfer Costs

Expenses devoted to redistributing money to help the most disadvantaged groups.

Foreign Currency

Currency found in one country but which is not official legal tender in that state.

Liquidity

The ability to convert an asset into cash quickly without significant loss of value.

Reserve Ratio

The percentage of deposits that banks must hold as reserves to legally meet requests for money from their clients.

Financial Intermediary

An individual or institution that acts as a go-between for two parties in a financial transaction, such as a bank or investment firm.

Stock Index

An economic factor that reflects the evolution of prices of securities traded over time.

Continuous Market Shares

A share trading system that operates continuously through computerized systems, connected to the four Spanish stock exchanges.

Euribor

The interest rate applied to loans between banks in the Euro area.

Economic and Monetary Union (EMU)

A group of European Union countries that share a single currency and a single monetary policy.

Eurosystem

The institution composed of the European Central Bank (ECB) and the national central banks of the states that have adopted the euro as their currency.

Microcredit

A specialized bank loan, often associated with the Grameen Bank founded by Muhammad Yunus, which is based on trust and designed to support economic development in low-income communities.

Exchange Rate

The price of one currency against another.

Speculation

The use of financial resources to achieve high and fast profits, often involving significant risk.

Tariff

A tax levied on goods imported from another country.

Dumping

A measure where a company sells its products at a loss, allowing it to eliminate competition and gain market share. This practice is often considered unethical and can lead to trade disputes with other countries.

International Monetary Fund (IMF)

An international financial organization created in 1944 to promote global monetary cooperation and financial stability.

Public Deficit

An indicator representing a negative economic situation, specifically when government spending exceeds its revenue.

Appreciation

An increase in the value of a currency against other currencies.

Depreciation

A decrease in the value of a currency against another.