Term
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Definition
is a schedule or curve that shows the
amounts of real output (real GDP) that buyers collectively
desire to purchase at each possible price level |
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Term
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Definition
| A change in aggregate expenditures on real production made by the household, business, government, and foreign sectors that results because a change in the price level alters the purchasing power of money. |
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Term
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Definition
The impact of a rise in the cost of borrowing on production costs due to price inflation within an economy. The interest rate effect reflects the fact that most consumers and business finance managers will cut back on their borrowing activities when interest rates increase.
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Term
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Definition
| When domestic price levels rise relatively to foreign products, foreigners buy fewer U.S. goods, and Americans buy more foreign goods. |
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Term
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Definition
is a schedule or curve showing the relationship
between the price level and the amount of real
domestic output that firms in the economy produce |
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Term
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Definition
which is a measure of the relationship between
a nation’s level of real output and the amount of resources
used to produce that output
Total Output
Total Input |
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Term
| Determinants of Aggregate Supply |
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Definition
Input prices
Productivity
Legal-Institutional Envirionment
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Term
| Determinants of Aggregate Demand |
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Definition
Consumer Spending
Investment
Government spending
Net Exports |
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Term
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Definition
consists of
deliberate changes in government spending and tax collections designed to achieve full employment,
control inflation, and encourage economic growth |
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Term
| Council of Economic Advisers (CEA) |
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Definition
a group of three economists
appointed by the president to provide expertise and
assistance on economic matters. |
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Term
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Definition
government
spending in excess of tax revenues |
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Term
| Expansionary Fiscal Policy |
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Definition
A macroeconomic policy that seeks to expand the money supply to encourage economic growth or combat inflation (price increases) by
1) tax cuts
2)Government Spending
3) or both
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Term
| Contractionary Fiscal Policy |
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Definition
A type of policy that is used as a macroeconomic tool by the country's central bank or finance ministry to slow down an economy. Contractionary policies are enacted by a government to reduce the money supply and ultimately the spending in a country.
This is done primarily through:
1. Increasing interest rates
2. Increasing reserve requirements
3. Reducing the money supply, directly or indirectly |
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Term
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Definition
budget tax revenues in excess of government
spending. |
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Term
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Definition
is anything that increases the government’s
budget deficit (or reduces its budget surplus)
during a recession and increases its budget surplus (or
reduces its budget deficit) during an expansion without requiring
explicit action by policymakers. |
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Term
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Definition
(also called the full-employment budget) to adjust actual Federal budget deficits
and surpluses to account for the changes in tax revenues
that happen automatically whenever GDP changes |
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Term
| Political buisiness Cycle |
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Definition
| A business cycle that results primarily from the manipulation of policy tools (fiscal policy, monetary policy) by incumbent politicians hoping to stimulate the economy just prior to an election and thereby greatly improve their own and their party's reelection chances |
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Term
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Definition
An expansionary fiscal policy (deficit
spending) may increase the interest rate and reduce investment
spending, thereby weakening or canceling the
stimulus of the expansionary policy. |
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Term
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Definition
is essentially the total accumulation
of the deficits (minus the surpluses) the
Federal government has incurred through time |
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Term
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Definition
| Debt owed to creditorsoutside the U.S. |
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Term
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Definition
| standard monetary unit of measurement of value/cost of goods, services, or assets |
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Term
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Definition
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Term
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Definition
is the ease with which it can be
converted quickly into the most widely accepted and easily
spent form of money, cash, with little or no loss of purchasing
power |
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Term
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Definition
It consists of:
• Currency (coins and paper money) in the hands of
the public.
• All checkable deposits (all deposits in commercial
banks and “thrift” or savings institutions on which
checks of any size can be drawn). |
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Term
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Definition
| United States dollars (paper currency) |
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Term
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Definition
Funds held at a bank or any other financial institution as a means for people to quickly access their accounts by writing checks or drafts. These accounts are highly liquid in nature and thus, transferable from one person to another. Checking, savings and money market accounts are examples of a checkable deposit account.
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Term
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Definition
| financial institution that provides services, such as accepting deposits, giving business loans and auto loans, mortgage lending, and basic investment products like savings accounts and certificates of deposit |
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Term
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Definition
| A category within the money supply that includes M1 in addition to all time-related deposits, savings deposits, and non-institutional money-market funds |
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Term
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Definition
| A savings account or certificate of deposit (CD) held for a fixed-term, with the understanding that the depositor can make a withdrawal only by giving notice. |
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Term
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Definition
| also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States |
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Term
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Definition
| is the main governing body of the Federal Reserve System. It is charged with overseeing the Federal Reserve Banks and with helping implement monetary policy of the United States. Governors are appointed by the President of the United States and confirmed by the Senate for staggered 14-year terms. |
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Term
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Definition
12 banks which blend private and
public control, collectively serve as the nation’s “central
bank.” Its a bank to the bank. |
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Term
| Federal Open Market Committee (FOMC) |
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Definition
is made up of 12 individuals:
• The seven members of the Board of Governors.
• The president of the New York Federal Reserve Bank.
• Four of the remaining presidents of Federal Reserve
Banks on a 1-year rotating basis.
The FOMC meets regularly to direct the purchase and
sale of government securities (bills, notes, bonds) in the
open market in which such securities are bought and sold
on a daily basis. |
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Term
| Fractional Reserve Banking System |
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Definition
in which only a portion
(fraction) of checkable deposits are backed up by cash
in bank vaults or deposits at the central bank |
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Term
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Definition
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Term
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Definition
are an amount of funds equal to a
specified percentage of the bank’s own deposit liabilities. |
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Term
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Definition
the ratio of the required
reserves the commercial bank must keep to the bank’s own
outstanding checkable-deposit liabilities |
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Term
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Definition
| = actual reserves - required reserves |
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Term
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Definition
| is the amount computed by a bank by summing its holdings of vault cash with its holdings of reserve deposits at the Federal Reserve over a 2-week reserve maintenance period. |
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Term
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Definition
| is the interest rate at which depository institutions actively trade balances held at the Federal Reserve, called federal funds, with each other, usually overnight, on an uncollateralized basis. |
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Term
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Definition
in a fractional-reserve banking system, the total amount of loans that commercial banks are allowed to extend (the commercial bank money that they can legally create) is a multiple of reserves; this multiple is the reciprocal of the reserve ratio, and it is an economic multiplier.
_________1_________
required reserve ratio |
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