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A decline in investment spending at each price level will

shift the aggregate demand curve to the left

What are reasons for the up-sloping aggregate supply curve in the short run?

Input costs are fixed, but output costs are variables. And Higher prices mean higher profits when input costs are fixed.

The aggregate demand curve will shift to the right when consumers expect their future incomes to...


Aggregate demand will increase if consumers expect prices to ______ in the future


An in crease in aggregate demeand assuming constant aggregate supply will result in

demand pull inflation

For any increase in aggregate demand, the resulting increase in real _____ will be small, the greater increase in the price level.


Regulations imposed on firms by the government

increase per-unit production costs and shift the aggregate supply curve to the left

Raising business taxes, shifts the

aggregate demand curve to the left

Assuming constant price levels, any initial decrease in aggregate demand results in the ______ being at full strength


What statements best illustrate a decrease in domestic resource prices and associated shift of the Aggregate Supply curve

The supply of available land expands shifting the AS curve rightward. A decrease in the price of steel and electronics components shifts the AS curve rightward. And substantial rise in immigration decreases wages shifting the AS cure rightward.

Investment has an effect on


Increase in interest rate will

decrease demand and supply.

When levels of GDP are raised as well as full-employment that means increased


Demand will always _________ if they think prices will ______ in the future

Increase, Escalate

The aggregate demand curve would shift to the left if

taxes were increased

An unexpected increase or decrease in asset values that results in a change in consumer spending is called the

wealth effect

tax cuts will shift the AD curve to the


What summarizes the effect of rising national incomes abroad on US exports

US exports rise, foreigners are encouraged to buy more US products, and US aggregate demand curve shifts to the right

Raising business taxes shifts the

aggregate demand curve to the left

Increase in investment returns will

increase supply and demand

Fiscal policy consists of

Increasing gov spending and decreasing taxes

Increase in what will give a negative GDP gap


what is the total accumulation of the deficit called

national debt

What makes the price level remain stuck at its old level even when aggregate demand declines

Ratchet effect

When aggregate demand increases, the price level rises. But when aggregate demand decreases, the price level tends to be inflexible. What effect does this describe?

The ratchet effect

Discretionary fiscal policy is designed to do what

Control inflation, encourage economic growth, and achieve full employment.

Total public debt is the amount of money the U.S. owes the


The Federal Governments way of manipulating taxes and spending to stimulate the economy and rein in inflation is called

fiscal policy

Crowding out effect is a potential flaw of

expansionary fiscal policy

Crowded out results from a expansionary fiscal policy are

Interest sensitive consumption and investment

What provides the info needed to assess discretionary policy and determine weather it is expansionary, contractionary, or neutral

Cyclically adjusted deficits

What problems of timing may arise in connection with fiscal policy

Administrative lags, recognition lags, and operational lags.

Built in stability constitutes ______________ or passive or automatic budgetary policy


Economists agree that if the Fed decide to go with neutral fiscal policy then standardized budget and deficit or surplus of no more than 2% of GDP ________ is doing its job.

Monetary policy

Money owed to the Treasury is always

Public debt

What are some US securities

Treasury notes, bonds, and bills, also US saving bonds. But not Treasury stocks or US checking bonds.

Fiscal policy is always the

manipulation of taxes and federal spending.

Discretionary fiscal policy is designed too

encourage economic growth, control inflation, and achieve full employment.

Public borrowing drives up real interest rates and does what to private investment spending

reduces it

Which of the following is a problem that may arise in connection with fiscal policy

recognition lag

What characterize near-monies

Don not function directly as a medium of exchange, highly liquid, and can be readily converted into check-able deposits.

Cash is perfectly


When people measure the worth of various items in terms of money, money is performing the function of what?

Unit of account

The federal reserve banks deal with who

Government, commercial banks, and thrifts.

The federal reserve banks do not deal with who

The public and small businesses

The board of governors with the aid of the Federal __________ ___________ committee make the basic policy decision that provide monetary control of the US money and banking system

Open Market

Who doesn't compete with commercial banks

Federal Reserve Banks

Profit doesn't motivate who

Federal Reserve Banks

In emergency circumstances the Fed. Reserve Banks are the "______ of last resort" to the banking system.


Governments monetary authorities attempt to provide the amount of money needed for the particular volume of business activity that will promote what?

Price level stability, full employment, and economic growth. But no stock market fluctuation or commercial bank growth.

Money derives its value from its ________ relative to its utility


A unit of account is a function of what


Functions of money include

Medium of exchange, unit of account, and store of value.

Some people put there wealth in the form of ______ to buy things later


How long is the terms for Chairperson and vice chairperson on the board of governors

4 years

Who selects the chairperson and vice one on the board of governors


How many members are on the Board of Governors


Money markets mutual fund companies use the combined funds of individual _________ to buy interest bearing short term credit instruments such as certificates of deposit and the US government securities


_______ money is the circulating debt of the Federal Reserve Banks


Are banks operating on the basis of fractional reserves and not vulnerable to panics or runs


Fractional reserves do not keep banks from panic


When a deposited check is drawn against another bank, it will _______ the reserves of that other bank


What deposits are ignored when determining required reserves

Savings and time deposits

Actual reserves - required reserves =

Excess reserves

How much ever you deposit into the checking account that will increase 100% of the check able deposits


One way banks can partly reconcile profit and liquidity goals is to

lend temporary excess reserves held at the Federal reserve banks to other commercial banks overnight to earn interest.

The monetary multiplier is similar to the ___________ multiplier available to the government


Lending process helps

create money

US has a system of _____ ________ that was established in part to prevent bank runs

deposit insurance

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