macroecon test 4 ch 9-13
Help!
|
|
||||
|---|---|---|---|---|---|
| ECON 1 test 4 Arnold Ch 9-13 Ch 9 Classical Macroeconomics and the Self-Regulating Economy Say’s Law | supply creates its own demand. Production creates enough demand to purchase all the goods and services produced.
🗑
|
||||
| Recessionary Gap | the condition in which the Real GDP that the economy is producing is less than the Natural Real GDP and the unemployment rate is greater than the natural unemployment rate
🗑
|
||||
| Inflationary Gap | 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
🗑
|
||||
| Laissez-faire | a public policy of not interfering with market activities in the economy
🗑
|
||||
| Efficiency Wage Models | these models hold it is sometimes in the best interest of business firms to pay their employees higher-than-equilibrium wage rates
🗑
|
||||
| Consumption Function | the relationship between consumption and disposable income. In the consumption function used in this text, consumption is directly related to disposable income and is positive even at zero disposable income
🗑
|
||||
| Marginal Propensity to Consume (MPC) | the ratio of the change in consumption to the change in disposable income
🗑
|
||||
| Autonomous Consumption | the part of the consumption that is independent of disposable income
🗑
|
||||
| Marginal Propensity to Save (MPS) | the ratio of the change in saving to the change in disposable income
🗑
|
||||
| Multiplier | the # that is multiplied by the change in autonomous spending to obtain the overall change in total spending; multiplier (m) = 1/(1-MPC)
🗑
|
||||
| Progressive Income Tax | an income tax system in which one’s tax rate rises as taxable income rises (up to some point)
🗑
|
||||
| Proportional Income Tax | an income tax system in which a person’s tax rate is the same regardless of taxable income
🗑
|
||||
| Regressive Income Tax | an income tax system in which a person’s tax rate declines as his or her taxable income rises
🗑
|
||||
| Budget Deficit | gov’t expenditures greater than tax revenues
🗑
|
||||
| Budget Surplus | tax revenues greater than gov’t expenditures
🗑
|
||||
| Balanced Budget | gov’t expenditures equal to tax revenues
🗑
|
||||
| Cyclical Deficit | the part of the budget deficit that is a result of a downturn in economic activity
🗑
|
||||
| Structural Deficit | the part of the budget deficit that would exist even if the economy were operating at full employment
🗑
|
||||
| Public Debt | the total amount that the federal gov’t owes its creditors
🗑
|
||||
| Fiscal Policy | changes in gov’t expenditures and/or taxes to achieve economic goals, such as low unemployment, stable prices, and economic growth
🗑
|
||||
| Expansionary Fiscal Policy | increases in gov’t expenditures and/or decreases in taxes to achieve particular economic goals
🗑
|
||||
| Contractionary Fiscal Policy | decreases in gov’t expenditures and/or increases in taxes to achieve economic goals
🗑
|
||||
| Discretionary Fiscal Policy | deliberate changes of gov’t expenditures and/or taxes to achieve economic goals
🗑
|
||||
| Automatic Fiscal Policy | changes in gov’t expenditures and/or taxes that occur automatically w/o (additional) congressional action
🗑
|
||||
| Crowding Out | the decrease in private expenditures that occurs as a consequence of increased gov’t spending or the financing needs of a budget deficit
🗑
|
||||
| Complete Crowding Out | a decrease in one or more components of private spending that completely offsets the increase in gov’t spending
🗑
|
||||
| Incomplete Crowding Out | the decrease in one or more components of private spending that only partially offsets the increase in gov’t spending
🗑
|
||||
| Marginal (Income) Tax Rate | the change in a person’s tax payment divided by the change in taxable income
🗑
|
||||
| Laffer Curve | 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)
🗑
|
||||
| Tax Base | in terms of income taxes, the total amount of taxable income
🗑
|
||||
| Money | any good that is widely accepted for purposes of exchange and the repayment of debt
🗑
|
||||
| Barter | exchanging of goods and services for other goods and services w/o the use of money
🗑
|
||||
| Medium of Exchange | anything that is generally acceptable in exchange for goods and services; a function of money
🗑
|
||||
| Unit of Account | a common measure in which relative values are expressed; a function of money
🗑
|
||||
| Store of Value | the ability of an item to hold value over time; a function of money
🗑
|
||||
| Double Coincidence of Wants | 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
🗑
|
||||
| M1 | currency held outside banks plus checkable deposits plus traveler’s checks
🗑
|
||||
| Currency | coins or paper money
🗑
|
||||
| Federal Reserve Notes | paper money issued by the Federal Reserve
🗑
|
||||
| Checkable Deposits | deposits on which checks can be written
🗑
|
||||
| M2 | M1 plus savings deposits (inc money market deposit accounts) plus small-denomination time deposits plus money market mutual funds (retail)
🗑
|
||||
| Savings Deposit | 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
🗑
|
||||
| Time Deposit | 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
🗑
|
||||
| Money Market Deposit Account (MMDA) | an interest-earning account at a bank or thrift institution, for which a minimum balance is usually required and most of which offer limited check-writing privileges
🗑
|
||||
| Money Market Mutual Fund (MMMF) | 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
🗑
|
||||
| Fractional Reserve Banking | a banking arrangement that allows banks to hold reserves equal to only a fraction of their deposit liabilities
🗑
|
||||
| Federal Reserve System (the Fed) | the central bank of the United States
🗑
|
||||
| Reserves | the sum of bank deposits at the Fed and vault cash
🗑
|
||||
| Required Reserve Ratio (r) | a %age of each dollar deposited that must be held in reserve form (specifically, as bank deposits at the Fed or vault cash)
🗑
|
||||
| Required Reserves | the minimum dollar amount of reserves a bank must hold against its checkable deposits, as mandated by the Fed
🗑
|
||||
| Reserve Requirement | the Fed rule that specifies the amount of reserves a bank must hold to back up deposits
🗑
|
||||
| Excess Reserves | any reserves held beyond the required amount; the difference between (total) reserves & required reserves
🗑
|
||||
| Direct Finance | borrowers & lenders come together in a market setting, ie, the bond market
🗑
|
||||
| Indirect Finance | funds are loaned and borrowed through a financial intermediary
🗑
|
||||
| Financial Intermediary | a financial intermediary transfers funds from those who want to lend funds to those who want to borrow them
🗑
|
||||
| Asymmetric Information | relates to an economic agent on one side of a transaction having information that an economic agent on the other side of the transaction does not have
🗑
|
||||
| Adverse Selection | 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
🗑
|
||||
| Moral Hazard | a condition that exists when one party to a transaction changes his/her behavior in a way that is hidden from and costly to the other party
🗑
|
||||
| Balance Sheet | a record of the assets and liabilities of a bank
🗑
|
||||
| Asset | anything of value that is owned or that one has claim to
🗑
|
||||
| Liability | anything that is owed to someone else
🗑
|
||||
| Insolvency | a condition in which one’s liabilities are greater than one’s assets
🗑
|
||||
| Board of Governors | the governing body of the Federal Reserve System
🗑
|
||||
| Federal Open Market Committee (FOMC) | the 12-member policy-making group in the Fed; this committee has the authority to conduct open market operations
🗑
|
||||
| Open Market Operations | the buying and selling of gov’t securities by the Fed
🗑
|
||||
| Monetary Policy | changes in the money supply or in the rate of change of the money supply, intended to achieve stated macroeconomic goals
🗑
|
||||
| S Treasury Securities | bonds and bond-like securities issued by the US Treasure when it borrows
🗑
|
||||
| Open Market Purchase | the buying of gov’t securities by the Fed
🗑
|
||||
| Cash Leakage | occurs when funds are held as currency instead of deposited into a checking account
🗑
|
||||
| Simple Deposit Multiplier | the reciprocal of the required reserve ratio, 1/r
🗑
|
||||
| Open Market Sale | the selling of gov’t securities by the Fed
🗑
|
||||
| Reserve Deficit/Deficient | the situation that exists when a bank holds fewer reserves than specified by the required reserve ratio
🗑
|
||||
| Discount Loan | a loan the Fed makes to a commercial bank
🗑
|
||||
| Discount Rate | the interest rate the Fed charges depository institutions that borrow reserves from it; the interest rate charged on a discount loan
🗑
|
||||
| Federal Funds Rate | the interest rate in the federal funds market; the interest rate banks charge one another to borrow reserves
🗑
|
||||
| Federal Funds Market | a market where banks lend reserves to one another, usually for short periods
🗑
|
||||
| Federal Funds Target Rate | the interest rate that the Fed wants the federal funds market rate to be
🗑
|
||||
| Term Auction Facility (TAF) Program | a program under which the Fed auctions funds to depository institutions; each TAF auction is for a fixed amount, with the TAF rate determined by the auction process (subject to a minimum bid rate)
🗑
|
Review the information in the table. When you are ready to quiz yourself you can hide individual columns or the entire table. Then you can click on the empty cells to reveal the answer. Try to recall what will be displayed before clicking the empty cell.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Created by:
katt61
Popular Economics sets