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30 Cards in this Set
- Front
- Back
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Macroeconomics
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the analysis of the overall performance of the economy as a whole.
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Equilibrium
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State of balance where there is no tendency for change.
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Leakage into the Circular Flow
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Saving
Imports Net Taxes |
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Injection into the Circular Flow
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Exports
Government purchases Investment |
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Inflation
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Increase in the value of a price index over a period of time.
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Whose hurt by Inflation?
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People on fixed incomes & assets
Creditors |
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Whose helped by Inflation?
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People who own variable assets
Debtors (people who borrow $) |
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Federal Open Market Comittee
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Consits of a Board of Governers & Federal Reserve Bank presidents.
Conducts Open Market Operations. |
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Discount Rate
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Interest Rate charged to banks for loans from a Federal Reserve Bank.
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Required Reserve Ratio
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Minimum amount of deposits the Bank must hold on Reserve.
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Federal Funds Rate
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The day-to-day lending & borrowing of banks excess reserves which are on account at the Fed.
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Simple Money Multiplier
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1/r
one divided by the required reserve ratio. |
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Demand for Money
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Relationship between interest rates & the Quanity of money held.
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Flow Variable
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Amount per unit of time.
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Stock Variable
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Amount measured at a particular point in time.
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Marginal Propensity to Consume
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That fraction of change in disposable income that is spent.
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Marginal Propensity to Save
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Change in Saving divided by the change in Disposable Income.
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Fiscal Policy (Indirect Channel)
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Congress & President make decisions.
Make changes in Government Spending, Transfer payments & Tax cuts. |
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Monetary Policy (Direct Channel)
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The Fed makes decisions.
Makes changes in Discount rate, Required reserve ration, Buys/Sells Securities. |
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Economy in a Recession, a Contractionary Gap. Demolish by:
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Fiscal Policy: Increase G & TP, Tax cuts.
Monetary Policy: Decrease Dr & r, buy securities. |
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Economy exeriencing Inflation, a Expansionary Gap. Demolish by:
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Fiscal Policy: Decrease G, TP & taxes.
Monetary Policy: Increase Dr & r, sell securities. |
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Frictionaly Unemployed
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Voluntary leave a job in search of another.
Just joining the Labor force. |
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Seasonaly Unemployed
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Can't work during certian times in a year.
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Structuraly Unemployed
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Skills possesed are no longer in demand.
Technology can cause this. |
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Cyclically Unemployed
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Laid off.
When what you produced is no longer in demand. |
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Say's Law
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Supply will create its own demand.
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Laissez-Faire
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Government should not intervene in the economy.
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Services the Federal Reserve System provides for the Economy:
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Buy & sale of Government Securites.
Extends loans to banks Clears Checks Ensures sufficient money & credit in banking system to support growing Economy. |
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Fiat Money
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Not redemable into precois metals.
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Token Money
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Face value of coin is less then the offical vlaue of coin.
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