Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
20 Cards in this Set
- Front
- Back
|
If consumption spending increases because people feel more confident about the future,
|
aggregate demand will shift to the right
|
|
|
When spending and incomes in an economy increase,
|
imports are likely to increase.
|
|
|
Using the AD/AS graph, when there is a cut in income taxes, the price level will _____ and GDP will _____.
|
increase & increase
|
|
|
Using the AD/AS graph, when there is an increase in military spending, the price level will _____ and GDP will ____.
|
increase & increase
|
|
|
When there is a change in government spending or taxes to affect aggregate economic activity, this is referred to as
|
fiscal policy
|
|
|
When the money supply is changed to affect aggregate economic activity, this is referred to as
|
montetary policy
|
|
|
The president and Congress conduct _____ and the Federal Reserve conduct _____
|
fiscal policy & monetary policy
|
|
|
Expansionary fiscal policy causes income and consumption to ______, which ______ money demand and causes interest rates to _____. There is an inflow of foreign finds, which causes the exchange rate to _____, making foreign goods _____ and results in current account ______.
|
increase
raises rise rise dficits |
|
|
Contractionary monetary policy increases interest rates and reduces demand for goods (both domestic and foreign) but causes domestic currency to appreciate. Therefore, the effect on the current account is
|
ambiguous
|
|
|
If a country implements an contractanry monetary policy, the short to medium term effects include
|
an increase in the country's interest rate and an appreciation of the country's currency.
|
|
|
Represents a moral hazard problem with international financial crisis response
|
Responding to a crisis with a lender of last resort institution invites riskier behavior because investors and the country in crisis know that they will be bailed out.
|
|
|
In a banking crisis, disintermediation occurs as banks
|
lose their ability to intermediate between savers and borrowers.
|
|
|
Fiscal Policy is
|
xxx
|
|
|
open market operations
|
xxx
|
|
|
When aggregate demand increases
|
xxx
|
|
|
If consumption spending increases because people feel more confident about the future,
|
xxx
|
|
|
Basel Accord and Basel II endeavor to improve banking practices by recommending best practices for
|
Capital requirements
Information disclosure supervisory review |
|
|
An example of expansionary fiscal policy
|
An increase in government spending
|
|
|
When spending and incomes in an economy increase,
|
xxx
|
|
|
If a country implements a contractionary monetary policy, the short to medium term effects include
|
xxx
|
