Exam 3 flash cards.docx

The Keynesian view is based on the thought that ?_________________? Keynes?s 2 disagreements with the classical school are: GDP= The slope of the consumption function is An increase in wealth ___ the consumption function An increased price level _____ the consumption function Increased expectations about the future _____ consumption function Increase in taxation will _____ consumption function To find any multiplier you take one over _____ A small change in government spending can create a large change in _____ Increased government spending or decreased taxation Decreased government spending or increased taxation Taxes reduce consumption by ______ X _______ Cash, dollar denominated, assets that can only be described in terms of money Non-dollar denominated asset, not cash ?flowing? amount of money per period of time The effect of inflation on pecuniary and non pecuniary assets are: The effects of deflation on pecuniary and non pecuniary assets are: Effect of C + I spending due to changes in the price level that alter the real value of pecuniary assets Nominal interest rate = real interest rate + inflation premium The shape of the AD curve is ________ Things that shift the AD curve The shape of the AS curve is _______ Things that shift the AS curve By changing one thing in circular flow it will affect all aspects If government encourages production the producers will make more ?stuff?, therefore ______________ Aggregate demand is not sufficient to consume all goods that are supplied 3 Goals of supply side policy are to: Supply side policy can be accomplished by: The three functions of money are: 4 characteristics of good money are: Money that is a commodity (useful) Money because the government said it is ?Bad money drives out good money? Only keeping part of the money deposited 2 ways the reserve requirements affect the money available: The board of governors is made up of ____ governors. The governors are appointed by the _____, and confirmed by the ________. The governors on the board serve __ year _______ terms The three goals of the Fed are: The fed has __ district banks and ______ ______. The voting members of the fed are: Currency + checkable deposits M1 + Savings accounts + mutual funds+ certificates of deposit Minimum required reserve for all banks Fed lending at discount window Way for banks to borrow money overnight from the fed to meet reserves The three federal monetary policy tools are: Where the Fed buys and sells bonds Occurs when consumption is greater than income Consumption expenditures that are independent of level of income The positive relationship between levels of consumption expenditures and levels of income Positive relationship between levels of current savings and level of income Investment expenditures that are independent of level of income Multiple by which equilibrium income will change given a change in autonomous consumption Multiple by which equilibrium income will change given a change in autonomous investment A fixed level of total taxes Total value of monetary plus nonmonetary assets in existence at a point of time The effect on investment spending that results from a change in the interest rate produced by a change in price level A short run situation in which the level of employment is less than if the full-employment level of output were produced Policies designed to stimulate production by altering incentives of producers An economy in which money is not used to facilitate exchange between individuals Situation in trading in which each party has what the other party wants and wants what the other party has An item that is generally acceptable as payment for goods and services Standard measure, such as the dollar, that is used to express the values of goods and services Ability to own wealth in form of some item Ease with which any asset can be converted into cash Anything that is generally acceptable as a medium of exchange Demand deposits or other checkable accounts that allow the transfer of funds by writing a check Type of transaction account with virtually no limits Chartered financial institution that accepts deposits of various types Total amount of additional money or checkable deposits created by some given amount of excess reserves Increase in the money supply created by some given amount of excess reserves Total value of loans and securities owned or held by the Fed Sum of depository institutions? reserves plus currency held by the Fed Method or tools that the Fed uses in efforts to control the monetary base and the money supply Market determined interest rate on loans of bank reserves among commercial banks Interest rate charged by the Fed to depository institutions on loans of reserves from the Fed