final exam macro

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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


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