36 terms

Economics Tests


Terms in this set (...)

Tools of monetary policy
Discount rate
Reserve requirement
Open market operations
Discount rate
Interest rate the feds charge for banks to borrow currency
Reserve requirement
Percentage of banks deposits that must be kept at currency in the bank
Open market operations
Fed's frequent buying and selling of gov securities, considered most significant of three tools
Banks create money through
Multiple transactions
Money multiplier
M=1/rr (reserve requirement)
Monetary policy
Fed reserve's actions to control us money supply
Expansionary policy
Increased money, economic growth, controls recession
Contractionary policy
Decreased money and economic growth, controls inflation
Raised discount rate, increasing reserve requirement, selling gov securities
Contractionary monetary
Lowered discount rate, lowered reserve requirement, buying gov securities
Expansionary monetary
Fiscal policy
Gov use of taxing and spending to meet needs
Measurement of expenses that meet income; created by gov spending more than tax revenue
Money owed by gov
Excess money due to more taxes than programs
Decrease taxes, increase spending
Expansionary fiscal
Increase taxes, decrease spending
Contractionary fiscal
Gov regulation
Plus: efficiency and fair prices
Cost: surplus and shortage
Adam smith
Wealth of nations;
Economy left alone; free trade
Karl marx
Das kapital; government controlled economy
John Maynard Keynes
General theory of employment, interest, and money; macro/microeconomics, capitalism that is protected and made efficient through the government
Promoting growth of private investment and competition while protecting from inflation
Homemade products being traded
Completely free of government control
Government control of all major industries
Comparative advantage
Lower opportunity cost than another country to produce a product
Absolute advantage
Requires less physical resources to produce a product
Trade barriers
Tariffs, quotas, regulations
Trading without restrictions
Best for an economy
Consumer Price Index
Measurement of inflation
Costs and benefits to third parties
Limited resources
Notes, bonds, mutual funds issued and guaranteed by gov
Level of satisfaction
Marginal cost
Cost of producing one additional unit of a good or servive
Total value of all stuff produced within a country