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Econ Final 3

STUDY
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If Ben's MPC is.80 this means he will
spend 80% of his increase in income
The immediate determinants of investment spending are the
rate of return and real interest rate
The multiplier may be calculated as
change in RGDP by initial change in spending
If net exports decrease from zero to some negative amount, the aggregate expenditure schedule would shift
downward
A recessionary gap is
potential-actual GDP
The foreign purchases effect suggest that a decrease in the US price level relative to other countries will
decrease imports and increase exports
An increase in aggregate demand in the vertical range of AS curve will
increase price level
Discretionary fiscal policy refers to
change in taxes and government expenditures
A tax reduction of a specific amount will be more expansionary the
larger the MPC
If the economy is encountering inflation, supply-side economists might recommend
wage and price controls
Checkable deposits are classified as money because
they are used in buying goods and paying debts
The asset demand for money
varies inversely with market rate of interest
The primary purpose of the legal reserve requirement
monetary authorities monitor bank's spending
Excess reserves refer to the
actual-required reserves
When commercial banks use excess reserves to buy government securities
new money is created
If the reserve ration was lowered
the money multiplier would increase
The three main tools of monetary policy are
discout rate, reserve ratio, open market operations
Which of the following will happen when the Federal Reserve buys bonds from the public
boosts the economy
The discount rate is the interest
rate Feds charge for loans to commercial or member banks
A change in the legal reserve ratio affects the
amount of excess reserves in banking