Economics Final One

Front 1

Fiscal policy

Back 1

affect of government policies on real GDP, employment and price level

Front 2

to eliminate an expansionary gap

Back 2

decrease government spending or increase taxes

Front 3

to eliminate a contractionary gap

Back 3

increase government spending or decrease taxes

Front 4

some problems with fiscal policy (things to assume)

Back 4

relevent spending is predicted accurately, various governemtn entities can somehow coordinate fiscal effects, shape of SRAS is known

Front 5

lag in fiscal policy

Back 5

time requred to pass fiscal legislation may hamper the effects

Front 6

Balanced Budget multiplier

Back 6

1

Front 7

MPC

Back 7

change in consumption / change in income

Front 8

MPS

Back 8

1-MPC

Front 9

Simple tax multiplier

Back 9

-MPC / 1-MPC

so a change in taxes = change in net taxes x (simple tax mulitplier)

Front 10

3 functions of the FED

Back 10

1. set required reserves for banks
2. give banks loans when they cannot met the reserve levels
3. set the reserve requirements

Front 11

districts in the federal reserve

Back 11

12

Front 12

M1=?`

Back 12

Checkable deposits, currency held by non bank public, travelers checks

Front 13

M2

Back 13

Savings deposits, money market accounts, small denomination time deposits

Front 14

Simple Spending Multiplier

Back 14

1/1-MPC

Front 15

If a bank has $500 and the required reserves is 20% how much can it loan?

Back 15

$400

Front 16

3 functions of money

Back 16

1. unit of account
2. store of value
3. median of exchange