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
