Economics Chapter 12 through 15

intermediate products
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Terms in this set (79)
output expenditure modelmacroeconomic model describing aggregate demand by the consumer, investment, government, and foreign sectorsnet exports of goods and servicesA term that refers to the difference between the United State's exports and its boom1946-1964population pyramidA diagram representing the distribution of population by age and sex.dependency ratioratio of children and elderly per 100 persons who are in the 18-64 working age bracketnet immigrationthe net change in population caused by people moving into and out of the countrypoverty thresholdan income level below that which is needed to support families or householdspoverty guidelinesadministrative guidelines used to determine eligibility for certain federal programsmedicaidhealth care for the needyearned income tax creditgives tax credits and even cash payments to qualified workersnegative income taxtax system that would make cash payments to individuals with incomes below certain levelsbusiness cycleregular increases and decreases in real gdpbusiness fluctuationUps and downs in an economyrecessiontwo or more consecutive quarters of decline in the GDPtroughpoint in time when real gdp stops declining and begins to expandpeakwhen real gdp stops expanding and starts decliningexpansionperiod of uninterrupted growth of real gdptrend linegrowth path the economy would follow if it were not interrupted by alternating periods of recession and recoverydepression scripcurrency issued by towns, chambers of commerce, and other civic bodies during the Great Depressionleading economic indicatorStatistical data that predict the status of the economy three to twelve months in the future.composite index of leading economic indicators (LEI)a monthly statistical series hat uses a combination of 10 individual indicators to forecast changes in real GDPeconometric modela macroeconomic model that uses algebraic equations to describe how the economy will behaveprice indexstatistical series used to measure changes in the price level over timeconsumer price indexseries used to measure price changes for a representative sample of frequently used consumer itemsmarket basketa representative collection of goods and servicescreeping inflationinflation in the range of 1-3% per yearhyperinflationinflation in the range of 500 percent a year and abovestagflationa period of slow economic growth and high unemployment (stagnation) while prices rise (inflation)producer price indexindex used to measure prices received by domestic producersimplicit GDP price deflatorindex used to measure price changes in gdpfrictional unemploymentunemployment caused by workers changing jobs or waiting to go to new onesstructural unemploymentunemployment caused by a fundamental change in the economy that reduces the demand for some workerscyclical unemploymentunemployment directly related to swings in the business cyclegdp gapdiff. between what the economy and does producemisery/discomfort indexunofficial statistic that is the sum of the monthly inflation and unemployment ratesFederal reserve system (fed)The central bank of the US privately owned, publicly controlledcommodity moneyobjects that have value in and of themselves and that are also used as moneyfiat moneymoney by gov. decreespeciegold or silver coinfederal reserve notethe national currency we use today in the United Statesmonetary unitstandard unit of currencymedium of exchangeanything that is generally acceptable in exchange for goods and servicesmeasure of valuea function of money that allows it to serve as a common way to express valuestore of valuesomething that keeps its value if it is stored rather than usedm1Money supply components conforming to money's role as medium of exchange; coins, currency, checks, other demand deposits, traveler's checksm2store of valueDemand deposit account (DDA)account whos funds can be removed by writing a check and without having to gain prior approval from the depository institutionlegal tenderfiat money that must by law be accepted for payment of public and private debtsnational bankcommercial bank charted by the national banking systemnational currencycurrency backed by gov. bonds and issued by commercial banksstate bankbank that receives its charter from the bank it operatescentral bankbank that lends money to other banks in times of needbank holidaybrief period during which all banks or depository institutions are closed to prevent bank runsexcess reservesReserves held by banks in excess of what banks are required to reservescurrency and deposits used to meet the reserve requirementfractional reserve systemsystem requiring financial institutions to set aside a fraction of their deposits in the form of reservesreserve requirementformula used to compute the amount of a depository institution's required reservesmember bank reservereserve kept by member banks at the fed to satisfy reserve requirementsbank runsudden rush by depositors to withdraw moneymember banka bank that is a member of the Federal Reserve Systemmonetary policyGovernment policy that attempts to manage the economy by controlling the money supply and thus interest rates.easy money policylower interest rates greater access to credittight money policyhigher interest ratesopen market operationsthe buying and selling of government securities to alter the supply of moneydiscount rateinterest rate that the Federal Reserve System charges on loans to the nation's financial institutionsprime raterate of interest that banks charge on loans to their best business customersquantity theory of moneyHypothesis that the supply of money directly affects the price level over the long runbank holding companiescompanies that own more than one bankregulation Zprovision extending truth-in-lending disclosures to consumers