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monetary theory final
Terms in this set (46)
the upward and downward movement of aggregate output in the economy is the...
the three players in the MS process are..
banks, depositors, central bank
prior to almost all recessions since 1950, there's a drop in..
the growth rate of the money stock
which theory relates the quantity of money and monetary policy to changes in aggregate economic activity and inflation
a continuous increase in the growth of the MS is likely followed by..
an increase in the price level (inflation)
complete Friedman's statement "Inflation is always and everywhere a ___ phenomenon"
major criticism of the view that expectations are formed adaptively is that..
this view ignores that people use more info than just past data to form expectations
the most comprehensive measure of aggregate output is..
markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called...
both ___ and ___ are monetary liabilities of the Fed
currency in circulation, reserve
higher ir might __ saving
when stock prices fall...
wealth may decrease and willingness to spend may decrease
when i purchase a corporate __, i'm lending funds for a time. when i purchase a __, i become an owner.
federal funds are..
loans made by banks to each other
a bond with default risk will have a ___ risk premium and an increase in its risk will __ the premium
higher gov deficits ___ bond supply and shift supply ___.
expectations change slowly over time in response to new info is...
risk premiums ___ during expansion
bond demanders are the ___
PV of expected future payment ___ as ir increases
an increase in time to promise future payment ___ the PV of the payment
bond ir is related to the price in a ___ fashion
increase in default risk of corporate bonds shifts demand ___ and treasury demand ___
spread between ir on bonds with default risk and default-free bonds is the ___f
MB minus currency equals ___
an increase in financial frictions __ aggregate __ demand
an increase in production cost ___ aggregate ___
aggregate supply curve shows the relationship between
LR aggregate supply curve is ___
a vertical line through the potential output
when ffr equal to the ir paid on excess reserves
demand curve for reserves is horizontal
ffr equal to the discount rate
supply curve of reserves is horizontal
Alan Greenspan and Ben Bernanke pursued ___ policy
workers voluntarily leaving their jobs
who believed that velocity is fairly stable in the SR
classical economists believe that if quantity of money doubled..
Keynesian theory emphasizes
ir on demand for money
demand for money as a cushion against contingencies is ___
velocity has fluctuations according to which theory
Keynesian demand for real balances
Md/P = L(i,Y)
What determined equilibrium of aggregate output in Keynes
Keynes reasoned that consumer expenditure is most closely related to ___
Greenspan wanted congress to...
determine what to do after negative supply shocks
In Keynes, declines in planned investment spending that produce high unemployment can be offset by raising...
In Keynes, as long as output is __ equilibrium, unplanned inventory investment will remain positive and firms will continue to ___ production
factors that influence planned investment spending
real ir, financial frictions, emotions
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