Term
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Definition
| The rate at which the money supply is used to make transactions for final goods and services |
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Term
| Why does an increase in money supply result in a decrease in interest rate? |
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Definition
| If there is an 8% interest rate, people demand the original $200 billion, not the new $250 billion. The extra money gets invested in bonds, stocks, and other financial assetts. This causes a rise in bond prices and a decrease in the interest rate. |
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Term
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Definition
| Banks make money by lending money and making investments. |
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Term
| Fractional Reserve Banking |
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Definition
| loaning out large majority of the banks money. |
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Term
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Definition
| the control a central bank has over the quantity of money and interest rates. |
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Term
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Definition
| when inflation and unemployment both rise. |
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Term
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Definition
| the different between the money the government spends and the money the government takes in. |
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Term
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Definition
| What you have on hand to purchase goods and services. People want to have cash on hand for emergencies. |
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Term
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Definition
| A firm owned by one person. Owner has complete control but it is hard to compete with largers firms. |
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Term
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Definition
| Two or more people are to own a business. Its easily established but each partner is liable for all bills of the firm. |
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Term
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Definition
| A fictional entity owned by stockholders ran by a board of directors. Each own has limited liability and can raise large amounts of capital. Raising more capital means more bills and potentially more debt. Very taxable because corporations pay income taxes. |
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Term
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Definition
| One whose quantity cannot be changed during the period of time udner consideration. |
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Term
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Definition
| One whose quantity can be changed during the relevant period. |
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Term
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Definition
| Cuts investment spending. |
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Term
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Definition
| Increases interest rates effecting private investors negatively. |
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Term
| What are the 3 levels of government? |
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Definition
| Federal, state, and local. Federal spends the most and state spends the least. |
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Term
| What are the two types of inflation? |
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Definition
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Term
| Who benefits from inflation? |
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Definition
| The borrower benefits more from inflation because when the money is paid back it will be worth less than it was at the time it was borrowed. |
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Term
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Definition
| General upward movement of prices. |
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Term
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Definition
| Wipes out the value of money very quickly. |
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Term
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Definition
| Erodes value gradually over time. |
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Term
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Definition
| The most widely quoted measure of inflation for the US. |
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Term
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Definition
| money supple is narrow, coins, paper money, bank deposits. |
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Term
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Definition
| Money supply is board, includes savings, money market mutual funds and deposits, and all of M1. |
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Term
| Federal Reseve System (FED) |
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Definition
| Nations central bank helps control the quantity of money. Provides facilites for collecting checks and supplies public with currency. |
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Term
| Fractional Reserve Banking |
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Definition
| The practice of loaning out a large majority of a banks money. |
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Term
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Definition
| The exercise of central banks control over the quantity of money and interest rates. Affects the GDP and price levels. |
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Term
| Legal Reserve Requirements |
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Definition
| The amount that banks must hold for every dollar of deposits. |
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Term
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Definition
| The period of time when at least one of the the firms inputs is fixed. |
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Term
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Definition
| Period of time that all inputs are variable, they can change. |
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Term
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Definition
| The relationship between the quantities of inputs used per period of time and the maximum quantity of the material that can be produced in that period of time. |
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Term
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Definition
| Firms total output divided by the amount of input used to make it. |
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Term
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Definition
| The addition of total output due to the addition of the last unit of input. |
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