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32 Cards in this Set
- Front
- Back
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business cycle |
short run economic fluctuations |
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business phases |
peak, trough, contraction, expansion |
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why the ad curve slopes downward |
wealth, int rate, and exchange rate effect |
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why the ad curve might shift |
changes in C, I, G, NX |
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aggregrate supply curve |
shoes total Q and g&s firms produce and sell at any price level |
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natural rate of output |
yn; amnt of output the econ produces when at natural rate |
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why lras curve will shift |
any effect on yn; change in human/ physical, natural resources, technology |
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stagflation |
slow economic growth and high unemployment |
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monetary policy |
setting of the money supply by policy makers in the central bank |
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central bank |
institution that oversees the banking system and regulates money supplies |
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fed reserve system |
central bank of us and conduct monetary policy |
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dual mandate |
supervise banks, fiscal agent for us bills, process checks and electronic payments, conduct economic research |
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structure of the fed |
7 board of governors; 12 regional fed banks |
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open markets operations |
the purchase and sale of us government bonds by the us |
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discount rate |
the int rate on loans the feds make to banks |
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fed funds rate |
the int rate banks change each other for loans; rate set by feds |
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problems controlling the money supply |
if households hold more of their money; banks hold more reserves than required |
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quantitive easing |
purch more gov securities |
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velocity of money |
# of transactions in which the average dollar is used |
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hyperinflation |
inflation exceeding 50% |
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fiscal policy |
setting of the level of gov. spending and taxation by gov. policymakers |
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exapansionary fiscal policy |
^ in G; decrease taxes; shifts ad to right |
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contractionary |
decrease g; ^ t; shifts ad to left |
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multiplier effect |
additional shifts in ad that result when fiscal policy increase income and consumer spending |
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marginal propensity to consume |
the fraction of extra income that households consume rather than save |
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crowding out effect |
gov spending and borrowing shifts ad right which rases R and reduces ad |
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supply side economics |
ppl believe the short run effects of fiscal policy mainly work thru ad |
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using fiscal policy to stabalize economy |
econ debate how active a role the gov should take to stabalize economy |
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lag arguments |
recognition; legaslative; implementation |
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automatic stabalizers |
gov doesnt have to get involved to stabalize economy |
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debt to gdp ratio |
measure fo the gov debt relative to its ability to raise tax revenue |
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gov debt |
accumulated deficits |
