The Sunday Mail
Austerity: Austerity is a political-economic term referring to policies that aim to reduce government budget deficits through spending cuts, tax increases, or a combination of both. Austerity measures are used by governments that find it difficult to pay their debts. The measures are meant to reduce the budget deficit by bringing government revenues closer to expenditures, which is assumed to make the payment of debt easier. Austerity measures also demonstrate a government’s fiscal discipline to creditors and credit rating agencies.
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Stimulus: In economics, stimulus refers to attempts to use monetary or fiscal policy (or stabilisation policy in general) to stimulate the economy.
Stimulus can also refer to monetary policies like lowering interest rates and quantitative easing
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Quantitative easing (QE): Also known as large-scale asset purchases, is a monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to inject money directly into the economy. An unconventional form of monetary policy, it is usually used when inflation is very low or negative, and standard expansionary monetary policy has become ineffective. A central bank implements quantitative easing by buying specified amounts of financial assets from commercial banks and other financial institutions, thus raising the prices of those financial assets and lowering their yield, while simultaneously lowering short term interest rates which increases the money supply. This differs from the more usual policy of buying or selling short-term government bonds to keep interbank interest rates at a specified target value.
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Credit creation: Credit creation is a situation in which banks make more loans to consumers and businesses, with the result that the amount of money in circulating (being passed from one person to another) increases. In other words, it refers to the unique power of the banks to multiply loans and advance and hence deposits
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Money Laundering: This is when money gained from a crime is put into a bank or any other legal business activities so that it can be accessed safely by the criminals and terrorists. It makes the proceeds of illegal activities easier to get to.
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Spread: A spread is the pip difference between the bid and the ask price of an underlying asset. As it is essentially the cost of making a trade, it is important for Forex traders to know what spreads are. To find the spread we minus the Bid (Sell) Price from the Ask (Buy) Price.
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Bid Price: The bid is the price at which the market (or your broker) will buy a specific currency pair from you. Thus, at the bid price, a trader can sell the base currency to their broker.
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Ask Price: The ask price is the price at which the market (or your broker) will sell a specific currency pair to you. Thus, at the ask price you can buy the base currency from your broker.
