Absolute (Money) Price

Fixed Exchange Rate System The
system whereby a nation’s currency is set
at a fixed rate relative to all other currencies, and central banks intervene in the
foreign exchange market to maintain the
fixed rate.
Fixed Input An input whose quantity
cannot be changed as output changes.
Fixed Investment Business purchases
of capital goods, such as machinery and
factories, and purchases of new residential
housing.
Flexible Exchange Rate System The
system whereby exchange rates are determined by the forces of supply and demand
for a currency.
Foreign Exchange Market The market
in which currencies of different countries are
exchanged.
Fractional Reserve Banking A banking
arrangement that allows banks to hold
reserves equal to only a fraction of their
deposit liabilities.
Free Rider Anyone who receives the
benefits of a good without paying for it.
Frictional Unemployment
Unemployment that is due to the natural
frictions in the economy and that is
caused by changing market conditions and
represented by qualified individuals with
transferable skills who change jobs.
Friedman Natural Rate Theory Within
the Phillips curve framework, the idea that,
in the long run, unemployment is at its
natural rate and that there is a long-run
Phillips curve, which is vertical at the natural
rate of unemployment.