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Macroeconomics pt. 2
uiuc econ 103 2nd midterm
| Question | Answer |
|---|---|
| Commodity monies | Money that has intrinsic value |
| Fiat or token monies | Money that is intrinsically worthless |
| Legal tender | Government endorsed money |
| Money | Anything excepted as a medium of exchange |
| Barter | Direct exchange of goods and services for others |
| M1 or transactions money | Can be directly used for transactions (Cash, traveler's checks, etc) |
| M2 or broad money | Close substitutes for transactions money (savings accounts, money market, etc) |
| Financial intermediaries | Banks that link lenders and borrowers |
| Run | When many people claim money from a bank |
| Federal Reserve System | Central bank of the USA |
| Reserves | Deposits a bank has at the Fed plus cash on hand |
| Required reserve ratio | Percentage of total deposits that a bank must keep at the Fed |
| Federal Open Market Committee | Sets goals regarding the money supply and interest rates and directs operations of the Open Market Desk |
| Open Market Desk | Where government securities are bought and sold |
| Transaction motive | Desire to have money for purchasing |
| Nonsynchronization of income and spending | Mismatch between income intervals and outflow of money |
| Speculation motive | Desire to have bonds when interest is high to sell them when it's low |
| Equilibrium interest rate | Point at which the money demand equals money supply |
| Tight monetary policy | Policies that contract the money supply |
| Easy monetary policy | Policies that expand the monetary supply |
| Federal funds rate | Interest rate of private banks borrowing from each other |
| Goods market | Market in which goods and services are exchanged and from which aggregate output is determined |
| Money market | Market in which financial instruments are exchanged and from which the equilibrium level of interest in determined |
| Expansionary fiscal policy | Increase in government spending or reduction in net taxes to increase aggregate output |
| Expansionary monetary policy | Increase in the money supply to increase aggregate output |
| Crowding-out effect | Tendency for increases in government spending to cause a decrease in private investment spending |
| Aggregate demand | Total demand for goods and services |
| Aggregate demand curve | Relationship between income and price levels, goods and money markets are both in equilibrium |
| Aggregate supply | Total supply of all goods and services |
| Aggregate supply curve | Relationship between aggregate output quantity and price levels |
| Cost shock or supply shock | Change in costs that shifts the aggregate supply curve |
| Equilibrium price level | Point at which aggregate supply and demand curves intersect |
| Inflation | Increase in overall price level |
| Demand-pull inflation | Initiated by increased aggregate demand |
| Cost-push or supply-side inflation | Initiated by increased costs |
| Stagflation | When output falls as prices rise |
| Frictional unemployment | Portion due to normal labor market problems |
| Structural unemployment | Portion due to changes in the structure of the economy |
| Cyclical unemployment | Increase/decrease of unemployment due to the normal business cycle |
Created by:
profaneomen
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