This site is 100% ad supported. Please add an exception to adblock for this site.

Econ Final

Terms

undefined, object
copy deck
Aggregate Demand
The quantity demanded of all goods and services (real GDP) at different price levels, ceteris paribus.
Aggregate Demand Curve
A curve that shows the quantity demanded of all goods and services (real GDP) at different price levels, ceteris paribus.
Aggregate Supply
The quantity supplied of all goods and services (real GDP) at different price levels, ceteris paribus.
Appreciation
An increase in the value of one currency relative to other currencies.
Automatic Fiscal Policy
Changes in government expenditures and/or taxes that occur automatically without additional congressional action.
Balanced Budget
Government expenditures equal to tax revenues.
Barter
Exchanging goods and service for other goods and services without the use of money.
Base Year
The year chosen as a point of reference or basis of comparison for prices in other years: a benchmark year.
Board of Governors
The governing body of the Federal Reserve System.
Budget Deficit
Government expenditures greater than tax revenues.
Budget Surplus
Tax revenues greater than government expenditures.
Cash Leakage
Occurs when funds are held as currency instead of being deposited into a checking account.
Chackable Deposits
Deposits on which checks can be written.
Complete Crowding Out
A decrease in one or more components of private spending completely offsets the increase in government spending.
Consumer Price Index
A widely cited index number for the price level; the weighted average of prices of a specific set of goods and services purchased by a typical household.
Contractionary Fiscal Policy
Decreases in government expenditures and/or increases in taxes to achieve particular economic goals.
Crowding Out
The decrease in private expenditures that occurs as a consequence of increased government spending or the financing needs of a budget deficit.
Currency
Cash and paper money.
Cyclical Deficit
The part of the budget deficit that is a result of a downturn in economic activity.
Cyclical Unemployment
The difference between between the unemployment rate and the natural unemployment rate.
Depreciation
An decrease in the value of one currency relative to other currencies.
Discount Rate
The interest rate the Fed charges depository institutions that borrow reserves from it.
Discretionary Fiscal Policy
Deliberate changes of government expenditures and/or taxes to achieve particular economic goals.
Double Coincidence of Wants
In a barter economy, a requirement that must be met before a trade can be met. It specifies that a trader must find another trader who is willing to trade what the first trader wants and at the same time wants what the first trader has.
Employment Rate
The percentage of the civilian noninstitutional population that is employed: Employment rate = numerber of employed persons/Civilian noninstitutional population.
Excess Reserves
Any reserves held beyond the required amount. The difference between (total) reserves and required reserves.
Exchange Rate
The price of one currency in terms of another currency.
Expansionary Fiscal Policy
Increases in government expenditures and/or decreases in taxes to achieve particular economic goals.
Federal Funds Market
A market where banks lend reserves to one another, usually for short periods.
Federal Open Market Committee (FOMC)
The twelve member policymaking group within the Fed. The committee has the authority to conduct open market operations.
Federal Reserve Notes
Paper money issued by the Fed.
Federal Reserve System (the Fed)
The central bank of the United States.
Fiscal Policy
Changes in government expenditures and/or taxes to achieve particular economic goals, such as low unemployment, stable prices, and economic growth.
Fractional Reserve Banking
A banking arrangment that allows banks to hold reserves equal to only a fraction of their deposit liabilities.
Frictional Unemployment
Unemployment due to the natural frictions of the economy, which is caused by changing market conditions and is represented by qualified individuals with transferable skills who change jobs.
Full Employment
The condition that exists when the unemployment rate is equal to the natural unemployment rate.
Incomplete Crowding Out
The decrease in one or more components of private spending only partially offsets the increase in government spending.
Inflation
An increase in the price level.
Interest Rate Effect
The changes in household and business buying as the interest rate changes (which, in turn, is a reflection of a change in the demand for or supply of credit brought on by price level changes).
International Trade Effect
The change in foreign sector spending as the price level changes.
Labor Force Participation Rate
The percentage of the civilian noninstitutional population that is in the civilian labor force. Labor force participation rate = Civilian labor force/Civilian noninstitutional population.
Laffer Curve
The curve, named after Arthur Laffer, that shows the relationship between tax rates and tax revenues. According to the Laffer curve, tax rates rise from zero, tax revenues rise, reach a maximum at some point, and then fall with further increases in tax ra
Long-Run Aggregate Supply Curve
The LRAS is a vertical line at the level of natural real GDP. It represents the output the economy produces when wages and prices have adjusted to their (final) equilibrium levels and neither producers nor workers have any relevant misperceptions.
Long-Run Equilibrium
The condition that exists in the economy when wages and prices have adjusted to their (final) equilibrium levels and neither producers nor workers have any relevant misperceptions. Graphically, long-run equilibrium occurs at the intersection of the AD and
M1
Includes currency held outside banks + checkable deposits + traveler's checks.
M2
Includes M1 + savings deposits (including money marker deposit accounts) + small-denomination time deposits + money market mutual funds (noninstitutional).
Marginal (Income) Tax Rate
The change in a person's tax payment divided by the change in the person's taxable income.
Medium of Exchange
Anything that is generally acceptable in exchange for goods and services. A function of money.
Menu Costs
The costs of changing prices.
Monetary Policy
Changes in the money supply, or in the rate of change of the money supply, to achieve particular macroeconomic goals.
Monetary Wealth
The value of a person's monetary assets.
Money
Any good that is widely accepted for purposes of exchange and in the repayment of debt.
Money Market Deposit Account
An interest earning account at a bank or thrift institution. Usually a minimum balance is required for an MMDA. Most MMDAs offer limited check-writing privileges.
Money Market Mutual Fund
An interest earning account at a mutual fund company. Usually a minimum balance is required for an MMMF account. Most MMMF accounts offer limited check-writing privileges. Only noninstitutional MMMFs are part of M2.
Natural Real GDP
The real GDP that is produced at the natural unemployment rate. The real GDP that is produced when the economy is in long-run equilibrium.
Natural Unemploymen
Unemployment caused by frictional and structural factors in the economy. Natural unemployment rate = Frictional unemployment rate + Structural unemployment rate.
Nominal Income
The current-dollar amount of a person's income.
Open Market Operations
The buying and selling of government securities by the Fed.
Open Market Purchase
The buying of government securities by the Fed.
Open Market Sale
The selling of government securities by the Fed.
Price Index
A measure of the price level.
Price Level
A weighted average of the prices of all goods and services.
Progressive Income Tax
An income tax system in which one's tax rate rises as one's taxable income rises (up to some point).
Proportional Income Tax
An income tax system in which one's tax rate is the same no matter what one's taxable income is.
Public Debt
The total amount the federal government owes its creditors.
Purchasing Power
The quantity of good that can be purchased with a unit of money. Purchasing power and the price level are inversely related: As the price level goes up (down), purchasing power goes down (up).
Real Balance Effect
The change in the purchasing power of dollar-denominated assets that result that results from a change in the price level.
Real Income
Income adjusted for price changes. A person has more (less) real income as the price of the good falls (rises), ceteris paribus.
Regressive Income Tax
An income tax system in which one's tax rate declines as one's taxable income rises.
Required Reserve Ratio (r)
A percentage of each dollar deposited that must be held on reserve (at the Fed or in the bank's vault).
Required Reserves
The minimum amount of reserves a bank must hold against its checkable deposits as mandated by the Fed.
Reserve Requirement
The rule that specifies the amount of reserves a bank must hold to back up deposits.
Reserves
The sum of bank deposits at the Fed and vault cash.
Savings Deposit
An interest earning account at a commercial back or thrift institution. Normally, checks cannot be written on savings deposits and the in a savings deposit can be withdrawn (at anytime) without a payment penalty.
Short-Run Aggregate Supply Curve
A curve that shows the quantity supplied of all goods and services (real GDP) at different price levels, ceteris paribus.
Short-Run Equilibrium
The condition that exists in the economy when the quantity demanded or real GDP equals the (short-run) quantity supplied of real GDP. This condition is met where the short-run aggregate demand curve intersects the short-run aggregate supply curve.
Simple Deposit Multiplier
The reciprocal of the required reserve ration, 1/r.
Store of Value
The ability of an item to hold value over time. A function of money.
Structural Deficit
The part of the budget deficit that would exist even if the economy were operating at full employment.
Structural Unemployment
Unemployment due to structural changes in the economy that eliminate some jobs and create others for which the unemployed are unqualified.
T-Account
A simplified balance sheet that shows the changes in a bank's assets and liabilities.
Tax Base
When referring to income taxes, the total amount of taxable income. Tax revenue = tax base x (average) tax rate.
Time Deposit
An interest earning deposit with a specified maturity date. Time deposits are subject to penalties for early withdrawal. Small-denomination time deposits are deposits of less than $100,000.
U.S. Treasury Securities
Bonds and bond-like securities issued by the U.S. Treasury when it borrows.
Unemployment Rate
The percentage of the civilian force that is unemployed: Unemployment rate = Number of unemployed persons/Civilian labor force.
Unit of Account
A common measure in which relative values are expressed. A function of money.
Wealth
The value of all assets owned, monetary and nonmonetary.

Deck Info

87

darkdiscordian

permalink