Macroeconomics (Facts)

Federal Open Market Committee consists of what?

7 members of Board of Govs. Pres. of New York district bank 4 other district presidents from the 11 remaining

To increase the money supply, the Feds?

decrease the reserve requirement, decrease the discount rate, and buy bonds

Federal personal income taxes affect aggregate demand how?

Indirectly By changing consumption

A function of money is that it can serve as a means to store value. This function of money can disappear when?

Inflation rate is very high

Structural Unemployment is the result of?

Technological change or permanent changes in the industry demand

Nominal

value in terms of money

What happened to the US money supply between 1929 and 1933? (First year of Great depression)

It fell by 1/3

Complements

Iteams used in conjunction with one an other

During FDR's first 100 days in office, he what?

Legalized bear Established the FDIC

Define the variables in MV = PT

M = Money supply V = Velocity of money P = Price level T= real GDP

Quantity theory of money

MV = PT Direct relationship between the quantity of money in the economy and the level of prices of goods and services sold

National income (NI) formula?

NI = NNP - S.D.

Net nation product (NNP) formula?

NNP = GNP - CCA

Factors that shift long run aggregate supply to the right?

Natural level of unemployment goes down Population Increase Technological improvements (Whatever increases productivity)

Official unemployment rate?

Number of unemployed people divided by size of the labor force

Personal Income (PI) formula?

PI = NI + SSI + BusTr - CIT - RE - Paytaxes - IBT

Profit rate

Profit earned as a percent of sales Ex: Firm sells $100 of goods, $5 dollars profit 5/100 = 5% profit rate

Real interest rate formula

Real=N-I Nominal interest rate - expected inflation rate

Personal Savings Formula?

S = PI - PIT - C

Of the three types of businesses (firms), with regard to the total number of firms, which type of business has made up most of the business in the last 10 years?

Sole Proprietorships

Of the three types of businesses (firms), which type of firm has earned the highest profit rate over the past ten years?

Sole proprietorships

When regarding a business cycle, the US economy in january of 1929 to march of 1933 was what?

Started out over equilibrium expanding towards a peak and then regressed to a trough

When regarding a business cycle, the US economy in January 2007 to January 2009 was what?

Started out over equilibrium expanding towards a peak and then regressed towards a trough

Aggregate equilibrium?

Sum of consumption spending, investment, gov spending, and net exports

The first successful attempt to eliminate bank panics came with?

The Aldrich-Vreeland Act

Bank panics have caused many recessions. The final successful attempt to eliminate bank Panics came with the enacting of:

The Federal Deposit Insurance Corperation

Between 1936 and 1937, what happened to the reserve requirements of banks, causing the second trough in the great depression?

They doubled

German POW camp prisoners used what as currency?

cigarettes

The Feds decrease the M1 money supply by a %. The velocity of money is constant, the QTM predicts a fall in what?

nominal GDP

The Feds decrease the M1 money supply by a %. if significant inflation results, the QTM predicts an increase in what?

nominal GDP

In recent Years, the total revenue of all the firms in the US was over twice as large as the total dollar value of Gross Domestic Product. (GDP $16 trill; Total sales $33 Trill) How is this possible?

-GDP only includes FINAL goods and services produced and sold during the year -GDP this year does not include the sale of used goods manufactured the previous year

Applicable reserve requirement for whole banking system?

-Increase in excess reserves divided by -desired expansion of money supply

Of the following factors that affect the money supply does the Fed have direct control?

-The discount rate -High Powered money -Required reserves -Open market operations

Current legal reserve requirement of banks on demand deposit liabilities?

10%

The Federal Reserve System was instituted in?

1913, by an act of congress to overcome repeated bank panics in the U.S. economy

Adam smiths wealth of nations, what level of bank reserves for London banks did he cite in his discussion?

20%

The current, official, unemployment rate for the U.S. Labor force is?

5.9%

Between the first U.S. bank in 1785 until 1837. What was the legal reserve requirement of banks on liabilities?

50%

An increase in the money supply will lead to an increase in equilibrium real GDP only if what?

The aggregate supply curve is not vertical

Of the following factors that affect the money supply does the Fed have NO direct control?

The federal funds rate

The board of governors of the Federal Reserve is?

Appointed by the President, and each governor serves a 14 year term

Of the three types of businesses (firms), which type of business has sold the largest dollar value of output each year for the past ten years?

Corporations

Of the three types of businesses (firms), which type of firm has earned the largest total dollars of profit over the past ten years?

Corporations

Gross Domestic Product (GDP) constitutes what?

Current market value of all final goods and services produced in a given year within a country's borders

What was not an early commodity of money?

Diamonds

Substitutes

Ex: Increase in price of good X causes the demand for good Y Decrease in price for good X makes price decrease for good Y

When regarding a business cycle, the US economy today is what?

Expanding towards equilibrium.

The great depression, inclusive

From 1929 to 1939 Consisted of two deep troughs

What economic variable is not affected by changes in the amount of circulated money?

Full employment level of real GDP

GDP Formula?

GDP = G + (X-M) + C + IG

GNP formula?

GNP = GDP + RFRW - PTRW

Factors that affect shits of aggregate demand to right?

Government spending increase increase consumer confidence "People feel richer" Higher income of other countries

Ultimate goal of the Federal Reserve's monetary policy is?

economic growth with low inflation

Real

value in terms of another good/service