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10 Cards in this Set
- Front
- Back
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BUSINESS CYCLES
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Expansion: increased business activity-wages, sales, and manufacturing
Peak: Upper limit Contracting: business activity declines. Over 6 months=recession. Over 18 months=depression Trough: stops declining and levels off |
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LEADING INDICATORS
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Tell us where the economy is going
* money supply (M2) * building permits * average weekly inital claims for state unemployment * average work week in manufacturing * new orders for consumer goods * changes in inventories of durable goods * change in sensitive materials prices * stock prices * changes in business and consumer borrowing |
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COINCIDENT INDICATORS
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Confirm where the economy is
* number of hours works * employment levels * non argicultural employment * personal income * industrial production * manufacturing and trade sales * GDP |
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LAGGING INDICATORS
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Change after the economy has begun a new trend
* corporate profits * average duration of unemployment * labor cost per unit of out put * ratio of inventories to sales * commercial and industiral loans outstanding * ratio of consurmer installment of credit |
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KEYNESIAN THEORY
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Believe that its the gov'ts right and responsibility to manipulate overall demand by changing its own levels of spending and taxation.
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MONETARIST THEORY
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Believe a well-controlled moderately increasing money supply leads to price stability
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SUPPLY-SIDE ENOCOMICS
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Believe that the gov't should allow the market forces determine the prices of all goods
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LAFER CURVE
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Believe when taxes rise there is not incentive for people to work hard
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FRB
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Federal Reserve Board determins monetary policy and takes actions to implement policy. Affects money supply by:
* Open- market spending * Changes in the discount rate (loans to member banks) * Changes in reserve requirements |
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FOMC
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Federal Open Market Committe- meet regularly to expand or contract the money supply. Buy- increases money. Sell-decreases money
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