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37 Cards in this Set
- Front
- Back
The tax multiplier is:
a. positive and smaller than the income multiplier b. negative and smaller than the income multiplier c. positive and larger than the income multiplier d. the same as the income multiplier |
b. negative and smaller than the income multiplier
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Natural rate of UE:
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frictional and structural UE
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The amount by which aggregate expenditure falls short of the level needed to generate equilibrium national income at full employment w/o inflation:
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Recessionary Gap
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The amount by which aggregate expenditure EXCEEDS the aggregate expenditure level needed to generate equilibrium national income at full employment w/o inflation:
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Inflationary gap
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Government spending = tax revenues:
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Balanced budget
G - T = Balanced budget |
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The multiple by which the equilibrium level of national income changes when a dollar change in taxes occurs.
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Tax Multiplier
-MPC/(1 - MPC) |
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Tx revenues exceed government spending:
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Budget surplus
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Fiscal policy designed to moderate the severity of the business cycle:
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Countercyclical fiscal policy
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The relationship between the level of investment and the change in the level of national income:
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Accelerator
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Paper money that is not backed by or convertible into any good:
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Fiat money
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Coins and paper money:
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Currency
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Typically, M1 money:
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Money supply
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A commercial bank that receives its charter or license to function from a state government and its subject to the laws of that state:
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State-chartered bank
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A commercial bank that receives its charter from the comptroller of the currency and is subject to federal law as well as the laws of the state in which it operates:
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Nationally chartered bank
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The Fed's principal decision-making body, charged with executing the Fed's open market operations:
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Federal Open Market Committee
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The interest rate the Fed charges banks that borrow reserves from it.
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Discount rate
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Policy directives used by the Fed to moderate swings in the business cycle:
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Countercyclical monetary policy
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The minimum amount of reserves the Fed requires a bank to hold, based on a percentage of the bank's total deposit liabilities:
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Reserve requirement
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The buying and selling of government bonds by the Fed. Open Market Committee:
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Open market operations
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the market in which banks lend and borrow reserves from each other for very short periods of time, usually overnight:
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Federal funds market
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The interest rate of loans made by banks in the federal funds market:
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Federal funds rate
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The maximum percentage of the cost of a stock that can be borrowed from a bank or any other financial institution, with the stock offered as collateral:
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Margin requirement
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What are the factors of production:
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Labor
Capital and human capital Land incl. natural resources Entrepreneurship |
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What is the Production Possibilities Curve:
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Curve that shows relationship between consumption goods and capital goods.
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The quantity of other goods that must be given up to obtain a good. (i.e. married couple gives up single life opportunity)
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Opportunity Cost
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Advantages that differ in that one country can produce a good with less resources and the other can produce a good with a lower opportunity cost than the country that they trade with.
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Absolute vs. comparative advantage
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Insatiable desire for a good or service.
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Demand
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Quantity of a good or service that a supplier is willing and able to provide at different prices
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Supply
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A change in quantity demanded of a good that is caused by factors other than a change in the price of that good. (from change in income, taste, price of other goods, expectations about future prices, population sizes)
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Change in demand
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The change of demand of a good that is brought about by a change in the price of that good:
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Change in quantity demanded
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A change in quantity that is caused by factors other than a change in the price of that good:
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Change in supply
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A curve that depicts the relationship between price and quantity demanded:
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Demand curve
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A curve that depicts the relatinship between price and quantity supplied
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Supply curve
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The inverse relationship between price and quantity demanded of a good or service, ceteris paribus
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Law of Demand
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Changes in technology, resource prices, price of other goods, and number of suppliers
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Factors of Change in supply
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What is the Equilibrium of national income?
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C+I=C+S, where saving equals intended investment.
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Total value of all final goods and services, measured in current market prices, produced in the economy during a year:
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Gross domestic product, (GDP)
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