final exam macro
aps
% of income saved s/DI
2 types of gov fiscal policy
1 Expansionary 2 Contractionary
3 types of tax systems
1. progressive (tax raises when gdp raises) 2. proportional ( tax rate is constant when gdp rises) 3. regressive (tax rate falls when gdp rises)
mult effect
1/1-mpc or 1/mps
A bank's net worth is equal to its
Assets minus its liabilities
Closed economy
C+ I
What is produced is determined by who?
Consumers
3 categories of trade specialization
Labor intensive goods Land intensive goods Capital Intensive goods
The goal of expansionary fiscal policy is to increase
Real GDP
law of demand=
a reduction in market price increase in demand
Loans of federal banks to commercial banks are
an assest of federal reserve and a liability of commercial banks
Why is the long-run aggregate supply curve vertical?
because the economy's poteintal output is the productivity of real resources not price
Immediete short run
both input and output prices are fixed
An increase in the money supply, ceteris paribus, usually
decreases the interest rate and increases aggregate demand
The consumption of fixed capital is called what
depreciation
when loans are repaid at commerical banks money is
destroyed
personal savings is = to
disposable income - consumption
The main tools that the Fed can use to alter the reserves of commercial banks are the required-reserve ratio and the following, except
exchange rate
There is such a close relationship between changes in a nation's rate of productivity growth and changes in its average real hourly wage because if the average real hourly wage and output per worker is
increasing, then the amount of output available per capita for workers to buy will be growing so more can be purchased.Correct
Short run
input prices are fixed, but output prices can vary
Aggregate demand
is a measurement of the total amount of demand for all finished goods and services produced in an economy.
one major element of the command system
is central planning by government
stay at homes and retired people are
not in labor force
unemployment rate
number of individuals unemployed divided by labor force converted into percent form
he M1 money supply consists of currency the banks
outside of
Gov spending
purchases of goods and services by all levels of government.
An expected increase in the prices of consumer goods will
shift the AD right
inflationary gap
the demand for goods and services exceeds production due to factors such as higher levels of overall employment, increased trade activities, or elevated government expenditure
The federal funds rate is
the interest rate that banks charge one another on overnight loans, whereas the prime interest rate is the interest rate that banks charge on loans to their most creditworthy customers
investment schedule
the level of investment spending for a level of GDP
Long run
the time period in which all inputs can be varied
