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
|
Negative demand shocks (examples) |
decrease in consumer confidence and multiple business and banks fail |
|
|
Positive supply shocks (examples) |
firms cost of production fall |
|
|
Stagflation |
rising inflation and falling AO |
|
|
long-run macroeconomic equilibrium |
the economy self-corrects. AD=SRAS=LRAS |
|
|
recessionary gap |
decrease, triangle to the left |
|
|
inflationary gap |
increase, triangle to the right |
|
|
Stabilization policy |
offset shocks |
|
|
Expansionary vs. Contractionary Fiscal Policy |
recession AD increase. Expansion AD decreases |
|
|
The government spending multiplier vs. the government transfers/taxes multiplier |
i/ci-mpc, mpc/1-mpc |
|
|
The savings-investment spending identity in a closed economy |
savings and investment spending are always equal for the economy as a whole. government spending when tax revenue exceeds government spending. ... balance, is the total amount of savings generated within the economy. |
|
|
national savings (formula for GDP in a closed economy) |
GDP-C-G= investment spending |
|
|
The two main types of assets |
A financialasset isa paper claim that entitles the buyer to future income from the seller. A physicalasset isa claim on a tangible object that gives the owner the right to dispose of theobject as he or she wishes. |
|
|
The M1 vs. M2 |
circulation, checkable bank deposits, travelers checks. m1 and near monies |
|
|
The three main roles that money plays in the economy |
a medium of exchange an asset that individuals acquire for the purposes of trading. A store of values a means of holding its purchasing power. a unit of account a measure used to set prices |
|
|
A bank's T-account |
assets (loans, bank reserve) liabilities (deposits) |
|
|
The monetary base vs. the money supply |
Base- sum of currency in circulation and bank reserves. M1 + M2 |
|
|
The two main parts of the Federal Reserve System |
Board of governors, 12 regional federal reserve banks |
|
|
The Federal Open Market Committee |
consists of board of gov, pres of NY fed reserve bank, 5 other regional bank pres |
|
|
The federal funds rate vs. the discount rate |
the interest rate used in the FFM, interest rate charged by the FED directly to bank |
|
|
Open-market operations |
The purchase or sale of govt debt by the fed |
