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27 Cards in this Set
- Front
- Back
m1 |
money that can be directly used for transactions |
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m2 |
broad money includes trans money and near monies--close subs for trans money, such as savings account and money market account. |
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assets - liabilities = net worth |
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control money supply |
1. changing in the required reserve 2. changing the discount rate 3. engaging in open market operations |
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Expansionary Monetary policy (easy monetary policy) |
easy expanding monetary plicy |
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Contractionary monetary policy(tight monetary policy) |
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Interest |
The fee that borrowers pay to lenders for use of their funds Interest rate goes up Bonds worth goes down |
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Transactive motive |
the main reason that people hold money to buy things |
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non-synchronization of income and spending |
the mismatch between the timing of money inflow to the household and the timing of money outflow for household expenses |
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speculation money |
one reason for holding bonds instead of money. buying bonds with high-interest rate hoping interest rates will go down. |
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labor up-unemployment down-employment up-income up-spending up-transactions up- m1 up |
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qmd= f (interest rates, p, y) |
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msupplied>mdemand excess supply of money mdemand>msupplied excess demand of money |
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Aggregate supply |
The total supply of all goods and services in an economy |
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Wages |
Are a large fraction of total costs and wage changes lag behind prices changes |
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Cost shock |
a change in costs that shifts the short-run as curve |
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AS ----> agg. q supplied vs agg price AD ----> agg . q demand vs agg price IS ----> agg . output y vs Interest Rate R |
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IS curve |
relationship between agg output and the interest rate in the goods market |
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FED rule |
Equation that shows how the feds interest rate decision depends on the state of the economy r= AY+bp+Y OUTPUT=Y AGG price=P Other Factors= Consumer confidence, domestic banks est, problems abroad |
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Real Wealth effect |
The consumption brought about by a change in real wealth that results from a change in the price level |
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Trade surplus |
country that exports more than it imports |
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Trade Deficit |
Import more than you are exporting |
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Terms of Trade |
The ratio at which a country can trade domestic goods for imported goods |
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Exchange |
the ratio at which two currencies are traded. The price of one currency in terms of another |
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Foreign exchange |
All currencies other than the domestic currency |
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Balance on current account |
net exports of goods plus net exports of services plus net investment plus net transfer payments |
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balance on capital account |
In the united states the sum of the following: change in private us assets abroad, the change in private foreign assets in the us, change in us gov assets abroad, and the change in foreign gov assets in the us. |