Term
| An increase in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run? |
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Definition
| The price level will rise, and the level of GDP will be unaffected |
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Term
| When you open a checking account at a bank of america and you save the money into that account, Bank of America |
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Definition
| Has more reserves and more excess reserves |
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Term
| ___________ spending follows a smooth trend whereas, ___________ spending is more volatile and subject to fluctuations |
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Definition
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Term
| If planned aggregate expenditure is above potential GDP and planned aggregate expenditure equal GDP, then |
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Definition
| the economy is in an expansion |
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Term
| The quantity theory of money implies that the price level will be stable (no inflation or deflation) when the growth rate of the money supply equals |
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Definition
| the growth rate of real gdp |
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Term
| Suppose the Fed decreases the money supply. In response households and firms will ________ short term assets and this will drive __________ interest rates |
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Definition
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Term
| Workers and firms both expect that prices will be 3% higher next year than they are this year. As a result, |
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Definition
| the short-run aggregate supply curve will shift to the left as wages increase |
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Term
| If technological change occurs in the economy, |
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Definition
| the long run aggregate supply curve will shift to the right |
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Term
| The taylor rule helps explain the relationship between the Fed's ________ and _________. |
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Definition
| federal funds target; economic conditions |
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