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Definition
| just a table which shows the amounts of a product that a buyer is willing (not actually purchasing) to buy at various prices… |
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| “Quantity Demanded” (such as “gallons of gasoline”) |
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Definition
| that there is always an inverse relationship between price and quantity demanded, ceteris paribus. |
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Definition
The entire Curve or graph is called "demand" Downward sloping inverse relationship
The points on the curve are ????????
The label D or D'(D'=prime)
The “D” here is not referring to a particular point on the graph.
The “D” here is just the “name tag” for the entire blue graph and it stands for “Demand” or “Demand Curve” |
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| 3rd varible is tempory voilation of |
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Definition
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Definition
| Decrease in demand Or a change in a third variable from one level to another level might cause “a decrease in demand”, which means that there is “a decrease in the quantity demanded AT EVERY possible PRICE”. |
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| Note the difference between “demand” and “quantity demanded”. |
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Definition
| Demand is the entrie graph, chart or tble Quanities demanded are only the points on the demand curve |
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| Each row in the table and each point in the graph represents |
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Definition
| a possible price and a possible quantity demanded. |
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| As we move from row to row in the table and from point to point in the graph, we say there is “no change in demand”. |
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Definition
| Only a change in "Possible QUANTITIES demanded" |
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| But as we move from row to row in the table and from point to point in the graph, we say there is a change |
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Definition
| in the quantity demanded as price changes. |
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Term
Only when the entire graph moves to the right,
or when the entire graph moves to the left, |
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Definition
| will we say there has been “a change in demand”. |
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Term
| So a change in a third variable from one level to another level |
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Definition
might cause a inc/dec in demand
This might be different type of cars. A toyota as the third varible might cause the demand to decrease where a Hummer might cause it to increase. The point is it is not because of the price from one level to another it is because of the third varible. |
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Definition
| means the whole demand curves moves, not individual points(which would be changes is possible quantites demanded) |
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Term
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Definition
| which means that there is “an increase in the quantity demanded AT EVERY possible PRICE”. |
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Term
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Definition
| which means that there is “a decrease in the quantity demanded AT EVERY possible PRICE”. |
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Term
| an increase in demand by the third varible will cause the demand curve to shift to the right or left? |
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Definition
| a shift of the demand curve to the right, |
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Term
| a decrease in demand by the third varible will cause the demand curve to shift to the right or left? |
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Definition
| a shift of the demand curve to the left, |
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Term
| A supply schedule is just a table which shows the amounts of a product that a producer or seller is willing & able to offer (not actually getting people to buy) to sell at various prices (whether or not buyers are willing to buy how much is offered is irrelevant and does not affect the willingness to sell): |
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Definition
| is just a table which shows the amounts of a product that a producer or seller is willing & able to offer (not actually getting people to buy) to sell at various prices (whether or not buyers are willing to buy how much is offered is irrelevant and does not affect the willingness to sell): |
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Term
Various Amounts or Quantities Supplied…
QS stands for “Quantity Supplied” (such as “gallons of gasoline”).
(higher quantities supplied in each row of the table reflect a greater willingness to sell at the price in that row). |
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Definition
| This is an increase/ increase or decrease/decrease (direct) relationship |
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Term
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Definition
| that there is always a direct relationship between possible prices and quantities supplied, ceteris paribus. |
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Definition
Direct relationship as price inc supplier will supply more
as price decrease the supplier will offer less
supply is upward sloping |
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Term
| As we move from point to point in the graph (as we move along the supply curve), “supply” is not changing, but |
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Definition
| “quantity supplied” is changing. |
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Term
| The entire Supply curve is known as supply and the points on the curve are |
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Definition
| Possible QUANTIES supplied |
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Term
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Definition
| states that there is always a direct relationship between possible prices and quantities supplied, ceteris paribus. |
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| Diference between "Supply" and quantity supplied |
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Definition
Note the difference between “supply” and “quantity supplied”.
“Supply” abbreviated as “S” refers to the entire table and the entire graph.
Each row in the table and each point in the graph represents a possible price and a possible quantity supplied. |
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Term
As we move from row to row in the table and from point to point in the graph, we say there is “no change in supply”.
But as we move from row to row in the table and from point to point in the graph, we say there is a change in the quantity supplied as price changes. |
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Definition
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Term
Only when the entire graph moves to the right,
or when the entire graph moves to the left,
will we say there has been “a change in supply”. |
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Definition
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Term
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Definition
| Remember thst the entire Suply curve is the "supply" the points are only possible quantities supplied |
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Term
| A shift to the right means an increase "supply" at every possible price |
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Definition
from one level to another might cause “an increase in supply”, which means that there is “an increase in the quantity willing to be supplied
AT EVERY possible PRICE”. |
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Term
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Definition
| (a shift of the supply curve to the left, which is being shown on this slide |
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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
| Three ingredients to have a market |
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Definition
1. Potential Buyer (demand)
2. Potietial Sellers (Supply)
3. interaction |
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| Market Quantity Demanded Equal Market Quantity Supplied? |
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Definition
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Term
| Only at the equilibrium price does neither a shortage nor a surplus exist and therefore price will neither rise nor fall. |
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Definition
| It is because price will have no further tendency to change at a price of $3 that we call it the equilibrium price. |
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Definition
| price has no further tendancy to change |
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Definition
| At prices above the equilibrium price will cause a surplus and will cause the price to be forced down. |
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Term
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Definition
| All Prices below the the equilibrium price will cause a shortage and also cause the price to rise |
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Term
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Definition
| A (persistent) rise in the price level. |
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Term
| The consumer price index (CPI) |
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Definition
| is considered to be a measure of the price level (we won’t say much more about the CPI, such as how it is calculated, etc.) |
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Term
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Definition
A measure of the average level of the prices of goods and services in the economy.
(we use CPI consumer price index on the graph) |
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Term
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Definition
that, technically, we have inflation only if the price level rises over and over again, not just once.
But we are going to simplify things and just say that a rise in the price level is “inflation”. |
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Term
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Definition
| Consumer Price index Vs Real GDP |
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Definition
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Definition
| Demand is remaining the same and the price increase is seller driven, caused by a decrease in supply |
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Term
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Definition
| When aggregate demand decreases while aggregate supply remains unchanged, it is called recession the price goes down, this is buyer driven. |
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Term
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Definition
| When aggregate demand increases while aggregate supply remains unchanged, this is buyer driven. |
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Term
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Definition
Flow of Money
C + Ig + G + Xn = GDP |
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Term
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Definition
So, an increase in consumption due to something other than a change in the price level…
or an increase in gross private domestic investment due to something other than a change in the price level…
or an increase in government spending due to something other than a change in the price level…
or an increase in net exports due to something other than a change in the price level… |
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Term
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Definition
| Decrease in the aggregate Demand = recession |
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Term
| An increase in aggraite demand |
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Definition
| caused by an increase in C or I(g) or G ect will cause us to return to equilibruim and full employement (cycical=0) at equilbiruim |
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Term
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Definition
Reserve Ratio (intial cash investment)= Checking account Bal
1000(1/10% or .1/1000)=10000 |
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Term
| OPEN MARKET OPERATIONS (most often used by The Fed to change the money supply) |
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Definition
| The fed does this through buying and selling of T-bills |
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Term
| When The Fed’s Federal Open Market Committee (FOMC) uses cash to buy US Treasury Bills from banks, banks receive the cash and increase their bank reserves, so banks now have more reserves to back-up their checking account balances, allowing them to increase their checking account balances, which increases the money supply. |
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Definition
| Increase money supply lowers interest rate and increases consumer and I(g) spending causing expansion through monatary policy= expansionary monatary policy |
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Term
| When The Fed’s FOMC sells US Treasury Bills to banks, banks have to give-up some of their cash reserves to buy the Treasury Bills, so banks now have less bank reserves to back-up their checking account balances, forcing banks to decrease their checking account balances, which decreases the money supply. |
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Definition
| Fed sell t-bill to bank= decrease in reserve = decrease in checking account balance=decrease in money supply=increase in interest rate=decrease in consumer and I(g)= decrease in economy=contrationary monatary policy |
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Term
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Definition
| The total amount of cash that a bank holds in its vault plus the total amount of cash a bank holds on deposit with the Federal Reserve Bank (note that reserves is how much cash a bank desires to hold, which is not the same as required reserves, which is how much cash banks must hold by law). |
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Term
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Definition
| The percentage of a bank’s total customer checking account balances that banks are required by law to keep as reserves. “RR” stands for “reserve ratio”. This is usually 10% of initial checking account deposit. |
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Term
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Definition
Cash reserves that banks must hold as a percentage (that percentage is the reserve ratio) of their total customer checking account balances, or
Cash that a bank holds as reserves and cannot use for making a cash loan. |
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Term
| fractional reserve banking system, |
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Definition
| which allows banks to keep less than 100 percent of their cash deposits as reserves (they just convert their entire cash deposits into checking account balances and then turn around and lend-out almost all of the cash)… |
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Term
| Three defintions of money supply M1, M2, and M3 the definition for M1 is |
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Definition
1.currency(bills and coins)
2. Checking account balances
3. travelrs checks |
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Term
| The Federal Reserve System (“The Fed”) is the central bank of the United States. |
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Definition
| The fed is the bankers bank and there are 12 fed reserve banks in the us |
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Term
| expansionary fiscal policy… Shifting AD to the right by increasing government spending and/or decreasing taxes is called expansionary fiscal policy… |
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Definition
| The government either decrease taxes (C) or increases (G) goverment spending to shift the demand to the right. |
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Term
| contractionary fiscal policy… |
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Definition
| Shifting AD to the left by decreasing government spending and/or increasing taxes |
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Term
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Definition
| is anything that people are generally willing to accept in exchange for goods and services or for payment of debts. |
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Term
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Definition
| is a good used as money that happens to also have intrinsic value independent of its use as money. (use of cigerattes in the war) |
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Definition
| is not commodity money because if everyone decided to no longer accept dollar bills as payment, the dollar bills would be worthless |
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Definition
| is money, such as paper currency, that is authorized by a central bank or governmental body. |
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| The Fed is practicing monetary policy. |
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Definition
| When The Fed changes the money supply, to change the equilibrium interest rate, which affects aggregate demand by affecting Ig and C, |
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Term
| Investment spending includes |
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Definition
| people buying a house, businesses buying capital |
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Term
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Definition
| Expansionary Monatary Police done by the Fedral Reserve |
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Term
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Definition
| Contractionary monatary policy done by the fed reserve |
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Definition
| Expansionary when the quantity demanded goes up |
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Term
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Definition
| when the price level goes down we call it deflation, when the quantity goes down we call that recession |
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Term
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Definition
| When the quanity goes down we go into recession Decrease in Supply |
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Term
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Definition
| The rr ratio(the beging deposit)= chaecking account balance |
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