MacroEcon2
Terms
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- The short-run "aggregate supply" curve is upward sloping because:
- expected input prices adjust gradually to changes in demand
- An increase in aggregate demand leads to:
- an increase in the price level in the short-run and long-run
- If consumers became more pessimistic about their economic well-being, the aggregate demand curve would:
- shift to the left
- Money serves as a: (4 things)
- medium of exchange, store of value, unit of account, standard of defferment plan
- A "store of value" is something that is used to:
- store wealth
- A "unit of account" is something that is used to:
- basis of quoting prices
- Introduction of money into the economy ______ the cost of exchange.
- lowered
- The percentage of of deposits banks must hold to meet their legal obligations is called the:
- REQUIRED reserve ratio
- Bank liabilities include:
- deposits
- Paper money in the Unites States is supplied by the:
- Federal Reserve
- The interest rates the Federal Reserve charges on its loans to member banks is called the:
- discount rate
- The current chairman of the Board of Governors of the Federal Reserve is:
- Ben Bernanke
- What is NOT a tool of monetary policy?
- Prime rate
- To increase the money supply, the Federal Reserve will:
- BUY government bonds, LOWER the discount rate, LOWER the reserve requirments
- To decrease the money supply, the Federal Reserve will:
- SELL government bonds, INCREASE the discount rate, INCREASE the reserve requirement
- The ultimate goal of monetary policy is:
- economic growth with low inflation
- The Federal Reserve's CURRENT operating target is the
- Federal Funds Rate
- The "money market" is in equilibrium when the:
- quantity of money demanded equals the quantity of money supplied
- If the F.R. wants to increase equilibrium real GDP, it should ____ the supply of money, which will ____ interest rates. Change in interest rates will ____ investment spending, causing aggregate demand to _____.
- increase, decrease, increase, increase
- The short-run relationship between inflation and unemployment is also called the:
- The Phillip's Curve
- According to the Phillips Curve, a decrease of the inflation relate would:
- rise the unemployment rate
- An increase in aggregate demand would move the Phillips curve _____.
- up
- The observed unemployment rate would equal the natural unemployment rate if:
- the inflation rate was equal to the expected inflation rate
- The consequences of trying to reduce unemployment BELOW its natural rate would lead to:
- higher and higher inflation
- The "rational expectations theory" is the theory that:
- people make economic decisions using all available PAST and PRESENT information
- tradition Keynesian school focused on what?
- aggregate demand
- Monetarists believe that changes in monetary policy:
- have only short-term effects on real GDP
- The time interval it takes for policymakers to realize that an economic problem exsists is called the:
- RECOGNITION LAG
- Long and Variable Lags in Expansionary Monetary policy lend support to:
- a monetary policy rule that would fix the growth of money supply
- New Classical economists support:
- predictable monetary and fiscl policy aimed at a low inflation