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| government outlays minus government receipts |
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| the economy wide demand for output when the goods and asset market are in equilibrum |
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| the record of a country's international trade in currently produced goods and services |
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| payments received from aboard inexchange of currently produced goods and services minus the analogous payments made to foreigners by the domestic economy |
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| the market value of final goods and srvices produced within nations borders during a fixed period of time |
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| the market value of final goods and services newly produced by domesticly owned factors of production during a period of time |
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| a branch of economics that deals with performance, structure, behaviour and decision making of the entire economy. |
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| a measure of the average level of prices for some specified set of goods and serivces , relative to the prices of a specified base period |
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| a national economy that has significant trading and financial relationships with other national economies |
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| the idea that similar foreign and domestic goods or baskets of goods should have the same price in terms of the same currency |
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| cost of living adjustments |
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| adjusting wages to reflect the inflation |
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| free from the government, market decides everything , wages dont go down to adjust the price |
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| government can interfere, don't want unemployment |
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| Freeman, just increase federal reserve by 2% |
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| the freedom of the central bank to conduct monetary policy in a way that it believes will advance the ultimate objectives of low and stable inflation, high economic growth and low unemployment |
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| a set of simple ,prespecified and publicly announced guidelines for conducting monetary policy |
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| tax induced deviations in economic behavior from the efficient free market outcome |
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| policy concerning the level and composition of government spending and taxation |
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| policy determining the level and rate of growth of the nation's money supply which is under central bank(fed. reserve system) |
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| the period of time during which aggregate economic activity is falling(demand)recession |
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| marginal prosensity(egilim) to consume: the amount by which desired consumption rises when current income rises by one unit. |
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| marginal product of labor:the amount of output produced per unit of addtl labor |
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| the number of dollars of money supply of money supply that can be created from each dollar of the monetary base calculated as the ratio of the money supply to the monetary base |
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| for any type of spending , the short run change in output resulting from one unit change in that type of spending |
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Definition
| the net increase (domestic less foreign) in a country's offical reserve assets |
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| balance of payments accounts |
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| the record of a country's international transactions , consisting of the current account and the capital and financial account |
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Definition
| the market value of an economys final output measured in terms of the prices that prevailed during some fixed base period(constant dollar gdp) |
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| the value of economy's final output measured using current market prices (current dollar) |
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| the record of unilatarel transfers of assets between countries |
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| the net flow of assets , uniterally transferred into a country |
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| net factor payment from abroad=GNP- GDP |
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Term
| capital and financial account |
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| the record of a country's international trade in existing assets, either real or financial |
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| foreign direct investment:the purchase or construction of capital goods by a foreign business firm |
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| income elasticity of money demand |
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Definition
| the percantage change in moey demand resulting from 1% increase in real income |
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| the number of times the money stock "turns over" each period |
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| downword sloping relationship between the inflation rate and unemployment rate |
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| a guideline for monetary policy, it relates the real FED funds rate to the difference between output and full employment output and the difference beteween inflation and its target |
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| frictional unmployment(1-2% people switching jobs)+structional unemp.3%caused by shfts in industries like auto declines |
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| An economy is in general equilibrium if every market in the economy is in equilibrium. |
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| money supply*velocity=GDP(p*Q) |
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| government revenue raised by printing money, |
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| To ways to increase money supply |
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| 1-Buy Bonds 2- Change reserve requirements 3- Directly influecing interest rate ; discount rate-lends banks to meet the reserve requirements. (fed), FFR-federal funds rate-banks are borrowing from others. 4-QE2 -buying from banks |
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| What makes fiscal policy effective? |
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Definition
| 1-MPC determines multiplier 2- tax rate 3- rational expectations(Ricardion-peoples behavior) 4- Speed |
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Term
| what matters for monetary policy? |
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Definition
| Ms up r is down I is up; the shape of demand curve(elasticity) |
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Term
| models are less reliable because |
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Definition
| 1-based on past big changes can occur 2-most models assure there is divergence. Things might not come back to norml 3- Based on normal dist. probability is small but what if the event is catastrophic 4-New normal world, old models dont tell anything |
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| what is the good measure to expect inflation? |
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| tips= nominal minus expected inflation |
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| why sterilizing good for anti-inflation? |
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Definition
| buy $ + print yuan + sell bonds |
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