Term
| How does the fed change monetary base? |
|
Definition
| Lending reserves to banks and purchases or sales of bonds |
|
|
Term
| What is the definition/equation for Monetary Base? |
|
Definition
|
|
Term
| What does currency in circulation mean? |
|
Definition
|
|
Term
| How can the fed influence the level of reserves? |
|
Definition
| By conducting open market operations and by making disount loans. |
|
|
Term
| What happens to interests rates if the fed starts selling bonds? |
|
Definition
|
|
Term
| How does the government contract Monetary Base? |
|
Definition
| The fed sells bonds, which is called a contractionary |
|
|
Term
| How does the government expand Monetary Base? |
|
Definition
| The fed buys bonds, which is called expansionary |
|
|
Term
| If the fed purchases contractionary OMO's it is called |
|
Definition
|
|
Term
| If the fed sells expansionary OMO's it is called |
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
| Market interest rates go down |
|
|
Term
|
Definition
| Market interest rates go up |
|
|
Term
| Equation for transactions demand |
|
Definition
| LT=F(y) in other words Transactions demand = face price X Income |
|
|
Term
| Equation for speculative demand |
|
Definition
| Ls=f(rm) in other words Speculative demand = Income X market rate of interest |
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
| What does liquidity mean? |
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
| Total demand for money is equal to what the fed supplys |
|
|
Term
| To manage the money supply, the Fed uses three Monetary Policy tools: |
|
Definition
| Open Market operations, Discount Policy, Reserve requirements |
|
|
Term
| What does Keynes 1 illustrate? |
|
Definition
| changing the supply of money will change investment and certain components of household purchases |
|
|
Term
| What does Keynes 2 illustrate? |
|
Definition
| That workers are over joyed when they get a raise so when companies are making good profits, workers will expect higher wages. (Prices (not interest) determine employment |
|
|
Term
| Average wage level divided by CPI equals? |
|
Definition
|
|
Term
| In equilibrium, marginal product labor is equal to |
|
Definition
|
|
Term
| If real wages are lower than MPL then companies will |
|
Definition
|
|
Term
|
Definition
| Marginal product of Labor |
|
|
Term
| Marginal Product of Labor |
|
Definition
|
|
Term
|
Definition
| How much the price of the good will be |
|
|
Term
| What is the equation for aggregate expenditure (AE) ? |
|
Definition
|
|
Term
| What is the slop of consumption? (MPC) |
|
Definition
|
|
Term
| What is the slope of savings? (MPS) |
|
Definition
|
|
Term
|
Definition
|
|
Term
| What cant the federal reserve change? |
|
Definition
|
|
Term
| How do you find the 'real wage'? |
|
Definition
| When you divide W (wage) and the price of the product |
|
|
Term
|
Definition
| % change in quantity divided by % change in price |
|
|
Term
|
Definition
| Price Stability, High employment, stability of financial markets and institutions, and economic growth. |
|
|
Term
| A decrease in the interest rate |
|
Definition
| causes an increase in the quantity of money demanded |
|
|
Term
| An increase in real GDP or an increase in the price level will shift money demand |
|
Definition
|
|
Term
| A decrease in real GDP or a decrease in the price level will shift money demand |
|
Definition
|
|
Term
| When the fed increases the money supply |
|
Definition
| the equilibrium interest rate falls |
|
|
Term
| When the fed decreases the money supply |
|
Definition
| the equilibrium interest rate rises |
|
|
Term
| Expansionary fiscal policy |
|
Definition
| Increasing government spending and lowering taxes |
|
|
Term
| Contractionary fiscal policy |
|
Definition
| decreasing government spending and increasing taxes |
|
|
Term
| If there is a recession, the government is most likely to use what fiscal policy |
|
Definition
| Expansionary fiscal policy |
|
|
Term
| If there is a rise in inflation, what fiscal policy will the government most likely use? |
|
Definition
| Contractionary Fiscal Policy |
|
|
Term
|
Definition
|
|
