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EC 252H
Exam 2
41
Economics
Undergraduate 2
11/09/2009

Additional Economics Flashcards

 


 

Cards

Term
increase in savings rate, s, causes long-run output, consumption and capital per worker to
Definition
rise because higher saving allows for more investment and a larger capital stock
Term
increase in population growth rate, n, causes long-run output, consumption and capital per worker to
Definition
fall because with higher population growth more output must be used to equip new workers with capital, leaving less output available for consumption or to increase capital per worker
Term
increase in productivity, a, causes long-run output, consumption and capital per worker to
Definition
rise because higher productivity directly increases output, by raising incomes, it also raises saving and the capital stock
Term
an increase in price level, p, causes money demand to
Definition
rise because the higher the price level the more number of dollars needed for transactions
Term
an increase in real income, Y, causes money demand to
Definition
rise because higher real income implies more transactions an thus a greater demand for liquidity
Term
an increase in real interest rate, r, causes money demand to
Definition
fall because higher real interest rate means a higher return on alternative assets and thus a switch away from money
Term
an increase in expected inflation, pie to the power of 3, causes money demand to
Definition
fall because higher expected inflation means a higher return on alternative assets and thus a switch away from money
Term
an increase in nominal interest rate of money, i to the power of m, causes money demand to
Definition
rise because higher return on money makes people more willing to hold money
Term
an increase in wealth, w, causes money demand to
Definition
rise because part of an increase in wealth may be held in the form of money
Term
an increase in risk causes money demand to
Definition
rise because the alternative asset has a high risk making money seem more attractive
Term
an increase in liquidity of alternative assets causes money demand to
Definition
fall because higher liquidity of alternative assets makes these assets more attractive
Term
an increase in payment technology causes money demand to
Definition
fall because people can operate with less money
Term
procyclical
Definition
variable that moves in the same direction as aggregate economic activity
Term
countercyclical
Definition
a variable that moves in opposite direction to aggregate economic activity
Term
acyclical
Definition
variables that do not display a clear pattern over the business cycle
Term
leading variable
Definition
a variable whose peaks and troughs occur before the corresponding business cycle peaks and troughs
Term
coincident variable
Definition
a variable whose peaks and troughs occur at about the same time as the corresponding business cycle peaks and troughs
Term
lagging variable
Definition
one whose peaks and troughs tend to occur later than the corresponding peaks and troughs in the business cycle
Term
a beneficial supply shock shifts the FE line...
Definition
right because more output can be produced for the same amount of capital and labor
Term
a increase in labor supply shifts the FE line...
Definition
right because equilibrium employment rises, raising FE output
Term
a increase in the capital stock shifts the FE line...
Definition
right because more output can be produced with the same amount of labor
Term
an increase in expected future output shifts the IS curve...
Definition
up and right because S NAT falls raising the real interest rate that clears the goods market
Term
an increase in wealth shifts the IS curve...
Definition
up and to the right because S NAT falls raising the real interest rate that clears the goods market
Term
an increase in government purchases, G, shifts the IS curve...
Definition
up and to the right because S NAT falls raising the real interest rate that clears the goods market
Term
an increase in taxes, T, shifts the IS curve...
Definition
no change if consumers take in RE or down and to the left because they would increase S NAT and reduce C which would lower the real interest rate that clears the goods market
Term
an increase in expected future marginal product of capital, MPK to the power of f, shifts the IS curve...
Definition
up and to the right because I d increases, raising the real interest rate that clears the goods market
Term
an increase in effective tax rate on capital shifts the IS curve...
Definition
down and to the left because I d falls, lowering the real interest rate that clears the goods market
Term
an increase in nominal money supply, M, shifts the LM curve...
Definition
down and to the right because real money supply increses, lowering the real interest rate that clears the asset market
Term
an increase in price level, P, shifts the LM curve...
Definition
up and to the left because real money supply falls, raising the real interest rate that clears the asset market
Term
an increase in expected inflation, pie to the power of e, shifts the LM curve...
Definition
down and to the right because demand for money falls, lowering the real interest rate that clears the asset market
Term
an increase in nominal interest rate of money, i to the power of m, shifts the LM curve...
Definition
up and to the left because demand for money increases, raising the real interest rate that clears the asset market
Term
a shock that shifts the IS curve to the right will shift the AD curve..
Definition
right because equilibrium in the goods and money markets requires a higher level of output, given that price level
Term
a shock that shifts the LM curve to the right will shift the AD curve..
Definition
right because equilibrium in the goods and money markets requires a higher level of output, given that price level
Term
SRAS will shift up or down when..
Definition
firms in the aggregate change the prices they charge, increase of prices shifts SRAS up
Term
LRAS will shift left or right when..
Definition
full employment output changes, LRAS will shift left when FE shifts left
Term
MB
Definition
Cu + Res
Term
cu
Definition
CU/DEP
Term
res
Definition
RES/DEP
Term
MM
Definition
M/MB
Term
M1
Definition
Cu + Dep
Term
M2
Definition
M1 + saving deposits + MMMF or MMDA
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