Econ 202 final exam
Terms
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- what is equation for GDP?
- C+I+G+Xn
- how many fed reserve banks r there?
- 12
- each bank has a board of how many directors?
- 9
- what was the 3rd quarter rise in real GDP?
- 2.2%
- who sets agenda for board of govs?
- Chairman
-
who sets discount rate
? - board of govs
- what is a "camel"
- rating standard from 1-5 (5 is worst)
- how many times a year does the FOMC meet?
- 8 times
- tariff?
- tax on commodity that can enter a country; absolute imit
- customs union
- 2 or more countries that abolish trade restrictions among themselves and levy a common tariff against outsiders (most successful= European union of 25 countries)
- free trade area?
- 2 or more countries abolishing all trade restrictions among themselves, but not setting a common tariff against outsiders. most famous= North american free trade area
- conduct?
- how countries int'l and domestic differ; not in reason/benefit from trade
- how many countries in europe adopted currency for euro?
- 12
- Milton Friedman?
- nobel prize winner for "capitalism and freedom"; when dealing in the mktplace, every person has freedom of choice to accept or reject what is offered or to select a preferred item or even brand out of a variety of alternatives.
- unemployment?
- proportion of work force tha tis involutarily unemployed, varies inversely w/ real physical output; higher level of output= lower unemployment
- inflation?
- process of rising price levels; t is computated as a weighted av of yeraly change in prices of individual products, where the weigh of each product corresponds to its relative importance in the consumer basket
- macroeconomics?
- concerned with AGGREGATE performance of the economy; highlights the problems of unemployment, inflation, and long-run growth.
- GDP
- most widely used measure of national output; money value of all FINAL goods and services produced each year.
- real GDP
- GDP adjusted for inflation
- Recession
- decline in real GDP for 2 or more successive quarters
- Stagflation
- simultaneous existence of unemployment and inflation
- monetary policy
- conducted by central bank, is an effective instrument in stabilizing and guiding the course of the economy; it is a demand management tool. its long-run objective is to maintain a growth rate in teh money stock comparable to that of real output
- 3 types of quantitative measure the Fed can employ in times of inflationary boom=
- increase legal reserve ratio of banks, increase the discount rate, sell gov bonds on the open market
- in times of recession, the Fed may:
- lower reserve requirements, reduce discoun rate, buy gov bonds on the open market to infuse money into the economy
- eq. of exchange
- MV=PQ
- prof Friedman and monetarists believe that:
- private economy is inherently stable and attribute most if not all economic fluctuations to the destabilizing effects of misguided large and rapid changes in the money stock
- Keynesians believe that:
- private economy requires stabilization policy that while money matters, other things matter as well; and tat a judicious mix of discretionary fiscal and monetary policy is needed to stabilize the economy
- when does demand inflation occur?
- when aggregate demand is increased along the upward portion of the aggregate-supply curve