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30 Cards in this Set

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