macroecon test 4 ch 9-13
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ECON 1 test 4 Arnold Ch 9-13 Ch 9 Classical Macroeconomics and the Self-Regulating Economy Say’s Law | show 🗑
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Recessionary Gap | show 🗑
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show | the condition in which the Real GDP that the economy is producing is greater than the Natural Real GDP and the unemployment rate is less than the natural unemployment rate
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Laissez-faire | show 🗑
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Efficiency Wage Models | show 🗑
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Consumption Function | show 🗑
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show | the ratio of the change in consumption to the change in disposable income
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Autonomous Consumption | show 🗑
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Marginal Propensity to Save (MPS) | show 🗑
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show | the # that is multiplied by the change in autonomous spending to obtain the overall change in total spending; multiplier (m) = 1/(1-MPC)
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Progressive Income Tax | show 🗑
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show | an income tax system in which a person’s tax rate is the same regardless of taxable income
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Regressive Income Tax | show 🗑
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show | gov’t expenditures greater than tax revenues
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Budget Surplus | show 🗑
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Balanced Budget | show 🗑
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show | the part of the budget deficit that is a result of a downturn in economic activity
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show | the part of the budget deficit that would exist even if the economy were operating at full employment
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show | the total amount that the federal gov’t owes its creditors
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Fiscal Policy | show 🗑
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Expansionary Fiscal Policy | show 🗑
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Contractionary Fiscal Policy | show 🗑
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show | deliberate changes of gov’t expenditures and/or taxes to achieve economic goals
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show | changes in gov’t expenditures and/or taxes that occur automatically w/o (additional) congressional action
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show | the decrease in private expenditures that occurs as a consequence of increased gov’t spending or the financing needs of a budget deficit
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show | a decrease in one or more components of private spending that completely offsets the increase in gov’t spending
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Incomplete Crowding Out | show 🗑
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show | the change in a person’s tax payment divided by the change in taxable income
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show | the curve that shows the relationship between tax rates and tax revenues; as tax rates rise from 0, tax revenues rise, reach a maximum at some point, and then fall w/ further increases in tax rates (dome curve)
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show | in terms of income taxes, the total amount of taxable income
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show | any good that is widely accepted for purposes of exchange and the repayment of debt
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show | exchanging of goods and services for other goods and services w/o the use of money
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show | anything that is generally acceptable in exchange for goods and services; a function of money
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Unit of Account | show 🗑
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Store of Value | show 🗑
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show | in a barter economy, a requirement which must be met before a trade can be made; it specifies that a trader must find another trader who at the same time is willing to trade what the first trader wants and wants what the first trader has
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show | currency held outside banks plus checkable deposits plus traveler’s checks
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Currency | show 🗑
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Federal Reserve Notes | show 🗑
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Checkable Deposits | show 🗑
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show | M1 plus savings deposits (inc money market deposit accounts) plus small-denomination time deposits plus money market mutual funds (retail)
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show | an interest-earning account at a commercial bank or thrift institution; normally, checks can’t be written on savings deposits, and the funds in a savings deposit can be withdrawn at any time w/o penalty payment
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show | an interest-earning deposit w/ a specified maturity date; these deposits are subject to penalties for early withdrawal (withdrawal before maturity date); small-denomination time deposits are less than $100,000
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Money Market Deposit Account (MMDA) | show 🗑
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show | an interest-earning account at a mutual fund company, for which a minimum balance is usually required and most of which offer limited check-writing privileges; only retail MMMF’s are part of M2
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show | a banking arrangement that allows banks to hold reserves equal to only a fraction of their deposit liabilities
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Federal Reserve System (the Fed) | show 🗑
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show | the sum of bank deposits at the Fed and vault cash
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Required Reserve Ratio (r) | show 🗑
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Required Reserves | show 🗑
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Reserve Requirement | show 🗑
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show | any reserves held beyond the required amount; the difference between (total) reserves & required reserves
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show | borrowers & lenders come together in a market setting, ie, the bond market
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Indirect Finance | show 🗑
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show | a financial intermediary transfers funds from those who want to lend funds to those who want to borrow them
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Asymmetric Information | show 🗑
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show | a phenomenon that occurs when the parties on one side of the market, who have info not known to others, self-select in a way that adversely affects the parties on the other side of the market
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Moral Hazard | show 🗑
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Balance Sheet | show 🗑
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Asset | show 🗑
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show | anything that is owed to someone else
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Insolvency | show 🗑
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Board of Governors | show 🗑
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Federal Open Market Committee (FOMC) | show 🗑
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show | the buying and selling of gov’t securities by the Fed
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Monetary Policy | show 🗑
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show | bonds and bond-like securities issued by the US Treasure when it borrows
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Open Market Purchase | show 🗑
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Cash Leakage | show 🗑
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show | the reciprocal of the required reserve ratio, 1/r
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show | the selling of gov’t securities by the Fed
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Reserve Deficit/Deficient | show 🗑
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show | a loan the Fed makes to a commercial bank
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show | the interest rate the Fed charges depository institutions that borrow reserves from it; the interest rate charged on a discount loan
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show | the interest rate in the federal funds market; the interest rate banks charge one another to borrow reserves
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Federal Funds Market | show 🗑
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Federal Funds Target Rate | show 🗑
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Term Auction Facility (TAF) Program | show 🗑
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