Term
Ted and Rose are saving more today because they want to make sure that their children will inherit lots of money when they die. This is an example of the _____ motive for saving. |
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On January 1, 2002, Jay purchased shares of stock for $10,000. On December 31, 2002, the same shares are now worth $7,500. Based on this information |
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Definition
Jay has a $2,500 capital loss for the year |
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Term
When the interest rate on newly issued bonds increases, the price of existing bonds |
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Definition
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Term
A trade deficit occurs when |
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Definition
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Term
The seven Fed governors, the president of the Federal Reserve Bank of New York, and four of the presidents of the other regional Federal Reserve Banks constitute the: |
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Definition
Federal Open Market Committee |
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Term
The market value of a particular bond at any given point in time is called the bond's |
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Definition
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Term
Velocity equals nominal GDP divided by |
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Definition
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Term
Holding other factors constant, if new technology comes online that allows machines to produce manufactured goods more quickly and with fewer defects, then the real interest rate will _____ and the equilibrium quantity of national saving and investment will ____. |
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Definition
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Term
| In order to promote growth through increased quantities of physical capital, governments must promote: |
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Definition
| high rates of saving and investing |
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Term
Increasing the capital available to the workforce, holding other factors constant, tends to _____ total output and to _____ average
labor productivity. |
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Definition
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Term
According to the quantity equation if the Federal Reserve expects velocity to increase by 1 percent per year, real GDP to increase
by 2 percent per year, and desires a 2 percent annual rate of inflation, then the money supply should be increased by approximately
_______ percent per year |
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Definition
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Term
| Net capital outflows equal: |
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Definition
| capital outflows minus capital inflows |
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Term
| In the long run, increases in output per person arise primarily from |
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Definition
| increases in average labor productivity |
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Term
| Empirical evidence indicates that lower real interest rates lead to _____ in savings |
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Definition
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Term
| Investment is a(n) _____ that changes the _____ of capital. |
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Definition
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Term
| Financial intermediaries are firms that |
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Definition
| extend credit to borrowers using funds from savers |
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Term
| If the actual reserve/deposit ratio equals 8% and the desired reserve/deposit ratio for this bank is 10%, the bank should: |
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Definition
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Term
| Private saving is negative when |
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Definition
| after-tax income of households and businesses is less than consumption expenditure |
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Term
| Private saving is negative when |
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Definition
| after-tax income of households and businesses is less than consumption expenditure |
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Term
| Private saving is negative when |
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Definition
| after-tax income of households and businesses is less than consumption expenditure |
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Term
| Private saving is negative when |
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Definition
| after-tax income of households and businesses is less than consumption expenditure |
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Term
When a U.S. restaurant purchases French wine and the French wine company uses the proceeds to buy U.S. government debt, U.S.
_____ and there is a capital _____ to/from the United States |
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Definition
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Term
| When the price of a pizza is quoted in dollars, this is an example of dollars serving as |
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Definition
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Term
| Most political scientists and economists agree that _____ is/are detrimental to economic growth |
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Definition
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Term
If the desired reserve/deposit ratio equals .05, then every dollar of currency in bank vaults supports ____ of the money supply,
while every dollar of currency held by the public contributes _________ to the money supply |
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Definition
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Term
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Definition
| claims to partial ownership of a firm |
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Term
| As the real interest rate increases the quantity of saving supplied _____ and the quantity of investment spending ____. |
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Definition
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Term
| When the Federal Reserve buys government bonds from the public, this is an example of a(n): |
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Definition
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Term
In Macroland, currency held by the public is 2000 econs, bank reserves are 300 econs, and the desired reserve/deposit ratio is 15%.
If the Central Bank prints an additional 300 econs and uses this new currency to buy government bonds from the public, the money
supply in Macroland will increase from ____ econs to _____ econs assuming that the public does not wish to change the amount of
currency it hold |
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Definition
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Term
In an open economy, an increase in the government's budget deficit will ____ the domestic real interest rate and _____ the level of
capital investment in the country, holding other factors constant. |
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Definition
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Term
| To increase future living standards by pursuing higher current rates of investment spending, an economy must: |
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Definition
| reduce current rates of consumption spending |
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