Fiscal policy is the use of the federal tax and spending process to influence the level of economic activity. In its simplest form, fiscal policy involves changing taxes and/or government spending in order to expand or contract aggregate DEMAND towards a targeted level of equilibrium national INCOME.

First-mover advantage, also called first-to-market, is the benefit a company gains by being first to market with a new PRODUCT or service. First-mover advantage is part of MARKETING STRATEGY—the coordination of product, pricing, promotion, and distribution decisions for each target market.

First in, first out (FIFO) and last in, first out (LIFO) are inventory-costing methods. Inventory costing methods are used to assign values to a firm’s ending inventory and to COST OF GOODS SOLD. For tax purposes, a firm will use the inventory-costing method that maximizes its cost of goods sold and minimizes the value of its ending inventory.

FINANCIAL ACCOUNTING is the system of collecting, processing, and periodically reporting a firm’s financial information; thus, its ultimate purpose is the dissemination of a firm’s financial data. This is accomplished by the publication of financial statements, all of which must be constructed in accordance with GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP).

FINANCIAL STATEMENTS are analyzed by MANAGEMENT and investors to predict and plan for the future. Financial ratios, fractions that show relationships between accounts found on the financial statements, are the tools used in financial-statement analysis. Some ratios are useful in the analysis of a single firm, while other ratios have meaning only when compared to those of other firms or to industry averages. A few of the more common financial ratios follow.

The Financial Planning Association (FPA) is an organization that trains and certifies financial planners. Financial planning is the process of establishing personal financial goals and allocating resources to obtain those goals. The FPA was created in 2000 through a merger of the Institute of Certified Financial Planners and the International Association for Financial Planning.

Financial intermediaries are institutions that take funds saved by households and in turn make LOANS to others. The process of taking savings and providing funds to borrowers is called intermediation, or indirect finance. While most people think of banks as financial intermediaries, in the United States, SAVINGS AND LOAN ASSOCIATIONS, mutual INSURANCE companies, CREDIT UNIONs, pension funds, finance companies, MUTUAL FUNDS, and money market funds all function as financial intermediaries.

Financial instrument is a broadly used term to refer to almost any obligation of one party to give financial ASSETS to another. There are three types of financial instruments, the first of which is cash.

The Financial Accounting Standards Board’s mission is “to establish and improve standards of FINANCIAL ACCOUNTING and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information.” It serves the “investing public through transparent information resulting from high-quality financial reporting standards, developed in an independent, private sector, open due process.”

Financial accounting, also called double-entry accounting, is the system of collecting, processing, and periodically reporting a firm’s transactions. First described in 1494 by a Franciscan monk, Fra Luca Pacioli, doubleentry accounting was largely an oral tradition which, for centuries, was passed down through the generations.

Fiduciaries are people and businesses that by law owe others a high duty of care when acting on their behalf. Corporate officers are fiduciaries for SHAREHOLDERS; trustees are fiduciaries for TRUST beneficiaries; executors are fiduciaries for estates and heirs; conservators and guardians are fiduciaries for wards.

The Federal Trade Commission (FTC), created in 1914, provides administrative enforcement of ANTITRUST LAWs. Section 5 of the Federal Trade Commission Act prohibits “unfair methods of COMPETITION.” While the CLAYTON ANTITRUST ACT, enacted in the same year, created judicial remedies for some anticompetitive activities, the FTC Act created a commission to review and regulate unfair competition.

The Federal Reserve is the central bank of the United States, issuing currency, directing monetary policy, and supervising commercial banks in the country.

The Federal National Mortgage Association, better known as Fannie Mae, is the nation’s largest secondary MORTGAGE financial institution. Fannie Mae was initially chartered during the GREAT DEPRESSION as a government-owned enterprise to buy federally insured mortgage LOANS. In 1968 Fannie Mae became a private, shareholder-owned company trading under the symbol FNM. It is the United States’ third-largest company in terms of ASSETS ($859 billion in 2002).

The Federal Mediation and Conciliation Service (FMCS) is a federal agency created by the TAFT-HARTLEY ACT (1947) to assist labor and MANAGEMENT relationships. The FMCS offers six categories of services, as follows.

The Federal Home Loan Mortgage Corporation (FHLMC), better known as Freddie Mac, is a governmentsponsored enterprise that purchases MORTGAGEs from lending institutions and packages them into securities sold to investors (SECURITIZATION).

The Federal Home Loan Bank System (FHLBS) was created by Congress in 1932 to stimulate housing financing in the United States.

The federal funds market is the short-term (usually overnight) lending and borrowing among banks in the United States to meet the FEDERAL RESERVE SYSTEM’s reserverequirement ratio.

As stated on their website, the Federal Financial Institutions Examinations Council (FFIEC) is a “formal interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by” the major regulatory agencies responsible for supervision of the financial industry in the United States.

The Federal Deposit Insurance Corporation (FDIC) is a government agency administering federal deposit INSURANCE funds and regulating state-chartered “nonmember” banks. The FDIC is directed by a five-member BOARD OF DIRECTORS, appointed by the U.S. president and approved by the Senate.

The U.S. judicial system, which is based on England’s system of COMMON LAW, was established by the authority found in Article I and Article III of the U.S. Constitution. In England between A.D. 476–1450, judges developed common law through their procedures and rulings. Eventually laws passed by legislatures replaced common law.

The Federal Communications Commission (FCC) is a government agency regulating interstate and international communications by radio, television, wire, satellite, and cable. The FCC was established by the Communications Act of 1934 as part of government regulation of evolving technologies.

The federal budget is the spending activity of the U.S. government. At almost $2.2 trillion in 2002, the federal budget is larger than the GROSS DOMESTIC PRODUCT (GDP) of every country in the world except Japan, China, and Germany. Yet federal government spending represents only about 21 percent of U.S. GDP, a smaller percentage than almost every other industrialized country in the world.

The Federal Aviation Administration (FAA) is an agency in the U.S. Department of Transportation responsible for the safety of civil air transportation.