Term
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Definition
| limit placed on the number of foreign imports |
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Term
| competitive edge on production costs |
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Definition
| nations have different laws where they can produce cheaper - child labor/worker safety |
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Term
| 2 plans to weaken currency and stimulate export spending |
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Definition
1. sterilization
2. change interest rates to affect international capital flow |
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Term
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Definition
| sell currency and buy dollars |
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Term
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Definition
| a tax on imports; retaliation is common - lead to tariff war |
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Term
| who regulates monetary policy |
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Definition
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Term
| who regulates fiscal policy |
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Definition
| the president and congress |
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Term
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Definition
| change in the government's budget position (G-T) |
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Term
| expansionary fiscal policy |
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Definition
| leads to more budget deficit (G>T); fed must borrow funds to make up difference |
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Term
| contractionary fiscal policy |
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Definition
| leads to budget surplus (G |
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Term
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Definition
| when the interest rate is driven up as a consequence of a budet deficit; it becomes more expensive for private investors to borrow which reduces private investment |
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Term
| crowding out effect is small if |
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Definition
| supply of capital is interest elastic if policy is perceived as responsible |
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Term
| crowding out effect is large if |
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Definition
| supply of capital is interest inelastic if policy is perceived as irresponsible |
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Term
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Definition
| total production exchanged in markets across the economy |
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Term
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Definition
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Term
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Definition
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Term
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Definition
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Term
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Definition
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Term
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Definition
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Term
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Definition
| changes in basic price factors; wages/oil |
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Term
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Definition
| the study of the major economic totals or aggregates that concerns the overall economic performance of a nation |
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Term
| 3 major economic problems |
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Definition
1. declining national production
2. unemployment
3. rising cost of living |
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Term
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Definition
| Y continues to decline below YF for 6 months or more |
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Term
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Definition
| prolonged, deep decline in Y |
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Term
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Definition
| ever person 16 years or older that is employed or actively seeking employment |
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Term
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Definition
| % of the labor force that is unemployed |
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Term
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Definition
| enough jobs but people haven't found job yet. Job search takes time |
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Term
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Definition
| enough jobs but a mismatch between skills and jobs. (technology) |
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Term
| demand deficient unemployment |
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Definition
| not enough jobs for all actively seeking employment. unhealthy economy |
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Term
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Definition
| P rises; fall in purchasing power of money |
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Term
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Definition
| price level falls; rise in purchasing power of money |
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Term
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Definition
| measured in current dollars; doesn't account for changes overtime (things costs a lot less years ago) |
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Term
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Definition
| value measured in constant dollars overtime |
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Term
| consumer price index (CPI) |
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Definition
| measures price changes of goods that typical household buys |
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Term
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Definition
| ability of the government to manipulate supply of financial capital; influences r, I, Y, and P |
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Term
| Why/when was the Fed established |
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Definition
| in 1913 to monitor banking system after a series of crises |
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Term
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Definition
| demanding financial capital |
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Term
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Definition
| supplying financial capital |
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Term
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Definition
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Term
| Why would the Fed buy bonds |
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Definition
| economy is in recession needs to be picked up |
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Term
| Why would the Fed sell bonds |
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Definition
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Term
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Definition
| Banks borrow reserves directly from Fed |
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Term
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Definition
| rate on borrowing from the Fed |
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Term
| non interventionists say 3 things will happen with monetary policy |
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Definition
1. international capital flow will flow out (higher rates)
2. Trade Balance (dollar is weakened)
3. Potential for inflation |
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Term
| factors that shift supply of capital |
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Definition
1. attitudes of suppliers
2. exit or entry of funds |
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Term
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Definition
| different interest rates charged for different borrows (government has lowest, individual has highest) |
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Term
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Definition
| additional r to get lenders to wait for repayment (difference between long term and short term supply lines) |
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Term
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Definition
| premium additional r to cover reduction in the real value of repayment |
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Term
| reasons for international capital flow |
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Definition
1. political or economic instability
2. one country's capital becomes more attractive (r increases) |
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Term
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Definition
| trade off between unemployment and inflation; implies government faces a policy trade off |
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Term
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Definition
| trade off between unemployment and inflation; implies government faces a policy trade off |
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Term
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Definition
| higher prices make workers want higher wages which makes production costs rise making prices rise again..... |
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Term
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Definition
| situation in which the economy experiences rises in both the price level and demand deficient unemployment |
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