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Definition
| Refers to the interest rate that the federal Reserve District Bank charges a member bank on loans. |
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Term
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| Refers to coins that have no intrinsic value |
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Term
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| currency in circulation plus checkable deposits. It's called money. Over 50% of M1 is in demand deposits |
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Definition
| everything that's in M1 plus time deposits or savings accounts. It's referred to as Near Monies |
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Term
| Federal Reserve Board of Governors |
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Definition
| has 7 members each serving a staggered 14 year term |
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Term
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Definition
| Are the basis for commercial bank lending. An individual bank can only lend to the fullest extent of its excess reserves. They are the amount by which the bank's acutal reserves exceed it's required reserves. |
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| are fractional because they are less than 100%. They are specified percentage of the banks pain-in demand deposits that must be sent forward to the Federal Reserve. |
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Definition
| In the federal reserve banking system, reserves lost by a single bank are not lost to the system as a whole. |
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Term
| Federal Reserve buying and selling bonds (gov. Securities) |
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Definition
| During a recession the federal reserve buys government securities or bonds. The money supply then increases. During inflation the Federal Reserve sells government bonds and the money supply decreases. This also applies to commercial banks buying and selling government bonds. |
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Definition
| When the dollar appreciates it's called a strong dollar. It buys more foreign currency. |
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| When the dollar depreciates, it's called a weak dollar and buys less foreign currency. |
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| increased taxes cause disposable income to decrease. High taxes discourage saving and spending. Higher income taxes decrease spending and aggregate demand. They retard economic growth. |
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Term
| Determinants of aggregate demand |
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Definition
| things that cause the entire demand schedule to shift either right of left are called determinants of aggregate demand. The number one cause is net worth or personal wealth. |
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Term
| Determinants of aggregate supply |
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Definition
| These are the things that cause the entire supply curve to shift either right or left and the primary thing that does that is the cost of the inputs of production. |
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Term
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Definition
| total output increases by 1% for every 1/4% of new investment in capital equipment |
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Term
| Full Employment Act, 1946 |
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Definition
Created 4 things:
Fiscal Policy
Monetary Policy
Joint Economic Committee of Congress
Council of Economic Advisors |
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Definition
| relates to the business cycle |
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Definition
| education and training improve workers' productivity |
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Definition
| is the amount by which government revenues exceed government spending |
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Term
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Definition
| the amount by which government spending exceeds government revenues |
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Term
| Production Possibility curve |
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Definition
| Demonstrates the limit of attainable output. It also demonstrates allocative and production efficiency. |
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Term
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Definition
| Increased government spending will increase the GDP. Decreased government spending will decrease the GDP. |
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Definition
| increases per unit production costs and reduces supply. It also retards economic growth |
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Term
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Definition
| When the federal reserve engages in an easy money policy it's attempting to increase private spending. In easy money policy the Fed can decrease the reserve requirement, decrease the discount rate, decrease the federal funds rate, buy government securities, or combination. Easy money policy is used to expand the money supply. |
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Term
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Definition
| When the federal reserve is engadged in tight money policy, it is attempting to slow down private spending. Obviously what they will do is increase the reserve requirement, increase the discount rate, increase the federal funds rate, sell government securities, or a combination. Tight money policy is used to contract the money supply |
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Definition
| is the rate commercial banks charge their favorite or best customers. |
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Term
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Definition
| Also called the demand deposit multiplier. It refers to the number of times each dollar is spent in the economy in one year. Monetary multipliers applies to both money expansion and money destruction. The GDP divided by total expenditures in Consumption (C) and Gross Private Domestic Spending(lg) is regarded as the number of times the average dollar is spent on goods and services each year. |
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Term
| Transactional demand for money |
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Definition
| refers to the money people hold as cash for the payment of day-to-day expenses. It does not vary with the GDP. It varies with opportunity cost. |
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Term
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Definition
| is paper money and is money only because the government says it is money. It also cannot be converted into gold. The paper money in your pocket is fiat money. |
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Term
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Definition
| is what you must take in payment of debt public or private. This is the dollar bills you have in your pocket. |
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Term
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Definition
| refers to coins that have no intrinsic value. They haven o metal in the equal to the face value of the coin. |
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Term
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Definition
| The supply of money determines the purchasing power of the monetary unit. A lower price level increases the real purchasing power of the monetary unit. Buying something at Wal-Mart as opposed to buying something at Tiffany's. All paper money in circulation are Federal Reserve Notes |
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Term
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Definition
| When a commercial bank extends or makes a loan, money is created. When a loan is paid off, money is destroyed. When the bank extends a loan, both assets and liabilities are increased. |
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Term
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Definition
| are a monetary restriction on imports |
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Term
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Definition
| Supply creates it's own demand. |
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Term
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Definition
| is an increase in the real GDP over time. Technically it's the increase in real GDP per capita over time. |
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Term
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Definition
| if you produce the specific mix of goods and services that maximizes society's well-being, you have attained allocative efficiency. |
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Term
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Definition
| is using the mis of technology and labor that minimizes per-unit production costs. Wage rates increase are the result of increased productivity |
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Term
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Definition
| Federal finance used to provide a non-inflationary full-employment budget. This is called functional finance. |
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Term
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Definition
| is defined as the output per worker per unit of time or output per unit of input. |
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Term
| Discretionary fiscal policy |
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Definition
| The delibrate manipulation of taxing and spending by congress is called discretionary fiscal policy and was created by the full employment act of 1946 |
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Term
| Strength of monetary policy |
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Definition
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Term
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Definition
| these are also called federal open market committee operations. This is the buying and selling of government securities by the federal reserve bank. |
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Term
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Definition
| When a loan is made, the money supply expands. When loans are repaid, the money supply contracts. |
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Term
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Definition
| a statement that summarizes the assets and the claims against those assets. |
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Term
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Definition
| higher production input costs increase per unit production costs and reduce aggregate supply. |
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Term
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Definition
| if the economy is at full production and demand continues to grow, prices will rise. |
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Term
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Definition
| as the economy reaches full employment, the cost of the inputs will push up the price level. |
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Term
| Contractionary fiscal policy |
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Definition
| is designed to decrease priveate spending. If you decrease private spending by increasing taxes, decreasing government spending, or a combination, this is Contractionary fiscal policy. |
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Term
| Expansionary fiscal policy |
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Definition
| is used to increase private spending. They can reduce taxes, increase government spending, or a combination. |
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Term
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Definition
| when politicians manipulate fiscal policy to maximize voter support. |
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Term
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Definition
| are also known as demand deposits. These are checking accounts. |
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Term
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Definition
| are savings accounts of all types |
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Term
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Definition
| when a commercial bank extends or makes a loan, it exchanges a promissory note for a demand deposit, which is a checking account, it creates money. |
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Term
| Check drawn against one bank |
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Definition
| When a check is drawn(written) against one bank and deposited into another, the bank against whom it is drawn loses reserves and demand deposits to the face value of the check. The bank into which it is deposited gains reserves and demand deposits to the face value of the check. |
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Term
| Functions of the federal reserve |
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Definition
| one of the main functions of the Federal Reserve is to clear checks, but its most important function is to control the money supply. |
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Term
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Definition
| cash held by a bank. This is the money held by a bank for its day-to-day operations |
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Term
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Definition
| when the federal government finances it's deficit by borrowing, private investment is crowded out. |
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Term
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Definition
| the U.S money supply is backed by the full faith and credit of the US government. |
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Term
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Definition
| this is where a bank holds less than 100% of its paid-in deposits as a reserve. It only holds a percentage of its deposits as cash and loans out the rest. |
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Term
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Definition
| the interest paid by one commercial bank to another on overnight loans. |
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Term
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Definition
| An unexpected large scale withdrawal from a bank. |
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