Term
| What are the three macroeconomic goals? |
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Definition
1) Economic Growth
2) Price Stability
3) Full Employment |
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Term
| What is the long run trend of GDP? |
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Definition
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Term
| What are the high worker productivity determinants? |
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Definition
1) Educated, healthy, skilled workers
2) Quality capital and technology
3) Incentives provided by a market economy |
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Term
| What is the US's literacy rate? |
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Definition
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Term
| What % of people over the age of 25 have a high school degree in the US? |
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Definition
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Term
| How is price stability measured? |
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Definition
| With the inflation rate, CPI |
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Term
| What is the inflation rate? |
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Definition
| The % increase from one year to the next in the average price of goods and services in the typical market. |
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Term
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Definition
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|
Term
| Who is the current Fed chair? |
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Definition
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|
Term
True or False:
Deflation is bad for the economy. |
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Definition
|
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Term
| Inflation is the burden of the ( borrower or lender?) |
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Definition
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Term
| Interest rates are really only _______. |
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Definition
| Prices adjusted for inflation |
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Term
| How is the unemployment rate calculated? |
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Definition
| US Bureau of Labor Statistics surveys 60,000 households monthly and then they are categorized. |
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Term
| What classifies a person as employed? |
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Definition
| If they are recieving wages regardless of full or part-time. |
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Term
| What classifies a person as unemployed? |
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Definition
| If they have done no work for pay and have actively looked for a job in the last four weeks. |
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Term
| How is a person considered to not be in the labor force? |
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Definition
| If they did not actively look for a job. |
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Term
| What is the natural rate of unemployment? |
|
Definition
|
|
Term
| What are the three types of unemployment? |
|
Definition
1) Frictional
2) Structural
3) Cyclical |
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Term
| What is considered frictional unemployment? |
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Definition
| Poeple who are changing jobs wor who are just entering the work force (like recent college graduates or stay-at-home parents now looking for work) |
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Term
| What is considered structural unemployment? |
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Definition
| People who do not have marketable skills or whose skills do not match the skills of the job openings. |
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Term
| What is cyclical unemployment? |
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Definition
| Those unemployed during a recession which is anything over 6% ish |
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Term
| Natural Unemployment Rate = _____ + _____ |
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Definition
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|
Term
| Anything over 6% is considered _____ unemployment. |
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Definition
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Term
| Extending unemployment benefits makes the job search ______. |
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Definition
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|
Term
| Structurally unemployed require.... |
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Definition
| Education, Training, Motivation and Mobility |
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Term
| What are the issues with the unemployment measure? |
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Definition
1) Part-Time work is considered employed
2) Discouraged workers are not considered to be in the labor force
3) Rate is a national, all over figure |
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Term
| What is the median salary in the US? |
|
Definition
|
|
Term
| What are the functions of money? |
|
Definition
1) Medium of exchange
2) Standard of Value
3) Store of Value |
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Term
|
Definition
|
|
Term
|
Definition
| Money that has value other than as a medium of exchange like cattle? |
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Term
| What are some characteristics that all money has in common? |
|
Definition
| Acceptable, Relatively scarce, divisible, portable and durable |
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Term
| What is the most narrow definition of money supply? |
|
Definition
|
|
Term
|
Definition
| M1 = Currency + Checkable Deposits |
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Term
|
Definition
Coins and Paper money
Coins make up 2- 3% |
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Term
| What % of money is paper money (federal reserve notes)? |
|
Definition
|
|
Term
| What % of money is checkable deposits? |
|
Definition
|
|
Term
| What are checkable deposits? |
|
Definition
| All deposits in any savings institution on which checks can be drawn. |
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Term
|
Definition
| M2 = M1 + Savings Deposits and Small Time Deposits (CD) |
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Term
|
Definition
1) Acceptability
2) Relative Scarcity
3) Legal Tender |
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Term
|
Definition
| being able to accept money in payment for a debt |
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Term
| What are the 3 types of banks? |
|
Definition
1) Central Banks
2) Quasi - Public Banks
3) Banks' Banks |
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Term
| How many federal reserve banks are there? |
|
Definition
|
|
Term
|
Definition
| A privately owned bank that is operated in the public interest. Owned by the commercial banks in the district. |
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Term
| How many members are there in the Board of Governors? |
|
Definition
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|
Term
| How long is a Board of Governors member's term? |
|
Definition
|
|
Term
| What does FOMC stand for? |
|
Definition
| Federal Open Market Committee |
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|
Term
| How many members are there on the FOMC? |
|
Definition
| 7 Board of Governors members + 5 district federal bank presidents |
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Term
| What federal bank president is always on the FOMC? |
|
Definition
|
|
Term
| What are the functions of the federal reserve system? |
|
Definition
1) Hold deposits of commercial banks - reserves
2) Assist in check clearing process
3) Act as fiscal agents for the government
4) Supervise commercial banks
5) Regulate the money supply |
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|
Term
| What is the check clearing process? |
|
Definition
| When your bank moves your money to another bank. |
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Term
|
Definition
| The manipulation of the money supply to achieve the macroeconomic goals. |
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|
Term
| What is fractional reserve banking? |
|
Definition
| Banks only being required to hold a fraction of their assets as reserves. |
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Term
| ______ Loans = _____ Money |
|
Definition
More / More
- OR -
Less / Less |
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Term
| What is the key to a bank's ability to make loans? |
|
Definition
|
|
Term
| What is expansion of monetary policy used for? |
|
Definition
| To stimulate a sluggish or recessionary economy |
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Term
| Why does expansion of monetary policy work? |
|
Definition
| Increases reserves which increases loans and spending which increases our GDP! |
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Term
| What is Restriction / Tight Monetary Policy used for? |
|
Definition
| Used to discourage spending |
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Term
| What is it called when the economy attempts to spend beyond its capacity to produce? |
|
Definition
|
|
Term
| Inflation is always caused by.... |
|
Definition
|
|
Term
| What is the main tool of monetary policy? |
|
Definition
|
|
Term
| What does the fed do if they want to provide reserves? |
|
Definition
| Buy securities from banks |
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|
Term
| What is the interest rate that banks pay eachother to borrow reserves? |
|
Definition
|
|
Term
| What is the neutral federal funds rate? |
|
Definition
|
|
Term
| What is the difference between monetary and fiscal policy? |
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Definition
| Monetary is the manipulation of money supply while fiscal is the manipulation of government spending. |
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Term
|
Definition
| President, Executive Branch, and Congress |
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Term
| If the economy is in a recession or has slow growth, how should fiscal policy be used? |
|
Definition
Increase government spending
Decrease taxes
Deficit Spending |
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Term
| How should fiscal policy be used to fix inflation or rapid GDP growth? |
|
Definition
Decrease government spending
Increase taxes
Budget Surplus |
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