Term
| Aggregate Production function |
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Definition
| Relationship that tells us how real GDP changes as the quantity of labor changes when all other influences on production remain the same. |
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Term
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Definition
| View that the growth of real GDP per person is temporary and that when it rises above the subsistence level a population explosion will bring it back down to that level. |
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Term
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Definition
Real GDP growth rate = (Real GDP in current year - Real GDP in previous year) divided by Real GDP of previous year
x100 |
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Term
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Definition
| Quantity of real GDP produced by an hour of labor. |
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Term
| neoclassical growth theory |
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Definition
| Proposition that real GDP per person grows because technological change produces saving and investments that make capital per hour of labor grow. Growth will end if tech. change stops. (diminishing marginal returns) |
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Term
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Definition
| Holds that real GDP per person grows because of choices people make in the pursuit of profit and that growth will persist indefinitely. Profit spurs tech change. opposite of malthusian theory. |
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Term
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Definition
| Real GDP divided by population |
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Term
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Definition
| Money wage rate divided by the price level. The real wage rate is the quantity of goods and services that an hour of labor earns. |
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Term
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Definition
| A way to estimate the number of years it takes for a certain variable to double. The rule of 70 states that in order to estimate the number of years for a variable to double, take the number 70 and divide it by the growth rate of the variable. This rule is commonly used with an annual compound interest rate to quickly determine how long it would take to double your money. |
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Term
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Definition
| Promise to make specified payments on specified dates. |
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Term
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Definition
| Bonds traded by firms and gov't |
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Term
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Definition
| The tendency for government budget deficit to raise the real interest rate and decrease investment. competes with businesses for scarce financial capital. |
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Term
| demand for loanable funds |
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Definition
| Relationship between the quantity of loanable funds demanded and the real interest rate. when all other influences on borrowing plans remain the same. |
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Term
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Definition
| Funds that firms use to buy physical capital. |
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Term
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Definition
| Firm that operates on both sides of the market for financial capital. A borrower in one market and a lender in another. |
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Term
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Definition
| total amount spent on new capital |
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Term
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Definition
| Aggregate of all individual financial markets |
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Term
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Definition
| Legal contract that gives ownership of a home to a lender in case the borrower fails to make their loan payments. |
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Term
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Definition
| Entitle their owners to the income from a package of mortgages |
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Term
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Definition
| Sum of private saving, government saving, and net taxes. |
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Term
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Definition
| Change in the value of capital |
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Term
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Definition
| Taxes paid to governments minus the cash transfers received from governments. |
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Term
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Definition
| Market value of what is lent - market value of what is borrowed. |
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Term
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Definition
| Number of dollars that a borrower pays and a lender receives in interest in a year expressed as a percentage of the number of dollars borrowed and lent |
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Term
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Definition
| Nominal interest rate adjusted for inflation. |
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Term
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Definition
| Amount of income that is not paid in taxes or spent on consumption goods and services. |
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Term
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Definition
| Certificate of ownership and claim to the firms profits |
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Term
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Definition
| Financial market where shares of corporations stocks are traded. |
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Term
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Definition
| Relationship between a quantity of loanable funds supplied and the real interest rate when all other influences on lending plans remain the same. |
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Term
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Definition
| Value of all things people own |
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Term
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Definition
| Bank's bank and a public authority that regulates a nation's depository institution and and conducts monetary policy. Which means that it adjusts the quantity of money in circulation and influences interest rates. |
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Term
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Definition
| Notes and coins held by individuals and businesses |
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Term
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Definition
| Leakage of bank reserves into currency is the currency drain. Ratio of currency to deposits. |
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Term
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Definition
| Relationship between the quantity of real money demanded and the nominal interest rate when all other influences on the amount of money that people wish to hold remain the same. |
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Term
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Definition
| Financial firm that takes deposits from households and firms |
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Term
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Definition
| Ratio of reserves to deposits that the banks plan to hold |
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Term
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Definition
| actual reserves minus desired reserves. |
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Term
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Definition
| Borrow overnight from another bank and pay interest overnight. |
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Term
| federal open market committee |
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Definition
| Main policy making organ of the Federal Reserve System |
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Term
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Definition
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Term
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Definition
| The Fed. Acts as the last lender to another bank if reserves are too low. Loans at the discount rate. |
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Term
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Definition
| Consists of currency and traveler's checks plus checking deposits owned by individuals and businesses. |
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Term
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Definition
| Consists of M1 plus time deposits, savings deposits, and money market mutual funds and other deposits. |
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Term
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Definition
| A method of settling a debt. |
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Term
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Definition
| Sum of the currency and depository institution deposits at the Fed. |
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Term
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Definition
| Any commodity or token that is generally acceptable as a means of payment. |
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Term
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Definition
| Ratio of the change in the quantity of money to the change in monetary base. |
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Term
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Definition
| Purchase or sale of securities by the Fed in the loanable funds market. |
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Term
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Definition
| Proposition that in the long run, an increase in the quantity of money brings an equal percentage increase in the price level. |
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Term
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Definition
| Minimum percentage of deposits that depository institutions are required to hold as reserves. |
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Term
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Definition
| Notes and coins in the bank's vault or in a deposit account at the Fed. |
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Term
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Definition
| Average number of times a dollar of money is used annually to buy the goods and services that make up GDP. |
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Term
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Definition
| Relationship between the quantity of labor supplied and the real wage rate. |
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Term
| Quantity of labor supplied |
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Definition
| number of labor hours that all the households in the economy plan to work. |
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Term
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Definition
| Price of labor is the real wage rate. Forces of supply and demand work as they do to eliminate surplus or shortage of labors. When there's neither a shortage or surplus the labor market is in equilibrium |
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Term
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Definition
| a household's income earned minus net taxes. increase means that consumption expenditure increases as well. But you don't spend as much as you make. |
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Term
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Definition
| the higher this is, other things remaining the same, the smaller its savings today. |
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Term
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Definition
| tools instruments and machines buildings and other items that have been produced in the past and are used today to produce goods and services. |
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