Growth, Finance, and Big Concepts
Machines, tools, and buildings used in production are called this.
What is physical capital?
Money allows buyers to give something to sellers when purchasing goods and services.
What is medium of exchange?
This institution oversees the banking system and regulates the quantity of money in the economy.
What is the central bank?
GDP stands for this.
What is Gross Domestic Product?
The inflation rate measures the percentage change in this from one period to the next.
What is the price level?
Economic growth is usually measured as an increase in this.
What is GDP per capita?
Paper bills and coins held by the public are called this.
What is currency?
This is the interest rate on loans that the central bank makes to banks.
What is the discount rate?
In the expenditure method, GDP is written as
What is Y = C + I + G + NX?
Zimbabwe is often used as an example of extremely high inflation, also called this.
What is hyperinflation?
The dislike of uncertainty is called this.
What is risk aversion?
A good money system requires money to be hard to fake. This characteristic is called what?
What is inability to counterfeit?
The buying and selling of government bonds by the monetary authority is called this.
What are open-market operations?
This GDP measure values production using current prices.
What is nominal GDP?
CPI stands for this.
What is Consumer Price Index?
A bond is best described as this type of financial instrument.
What is a certificate of indebtedness?
Name three characteristics that make something suitable as money.
What are durability, portability, divisibility, acceptability, stability, scarcity, uniformity, or inability to counterfeit?
This type of bank focuses on helping wealthy individuals manage their financial assets.
What is a private bank?
This measure is calculated as nominal GDP divided by real GDP times 100.
What is the GDP deflator?
If prices double while output stays the same, what happens to Nominal GDP and Real GDP?
Nominal GDP rises, but Real GDP may not rise.
The efficient markets hypothesis says asset prices reflect what kind of information?
What is all publicly available information about the value of an asset?
Before adopting the Euro in 2002, this was the official currency of Greece. Many countries have derived the names of their currencies from it.
What is Drachma?
Explain why banks do not simply keep all deposits in their vaults.
What is because they lend part of deposits to earn interest while keeping required reserves?
What are the three approaches for calculating GDP?
Income, Expenditure, Output
Why can CPI and the GDP deflator show different inflation rates?
What is because CPI uses a fixed consumer basket while the GDP deflator uses currently produced domestic goods and services?