Unemployment
If Sam the expert cassette maker is unemployed recently due to the advent of streaming technology, his unemployment type is this
What is structural unemployment?
The money multiplier is equal to the reciprocal of this
What is the reserve ratio?
What is government spending?
If exports are $5 billion and imports are $2 billion, net exports equals this.
What is $3 billion?
The relationship between inflation and unemployment can be illustrated on the short run of this.
The natural rate of unemployment is represented by this curve.
What is the long-run Phillips Curve?
The maximum amount of money a bank in the limited reserves framework can loan out is equal to this.
What is excess reserves?
In order to slow down the economy from a period of high inflation, congress may vote to do these two things:
Decrease government spending and increase taxes
If the marginal propensity to consume is .7, this must be the marginal propensity to save.
What is aggregate demand?
The natural rate of unemployment, found at the full employment level, is when there is none of this type of unemployment.
What is cyclical?
The amount banks charge each other for overnight loans is known as this
What is "the federal funds rate"?
The goal of contractionary fiscal policy is to close this.
What is the recessionary gap ?
If the expected inflation rate is 6%, the nominal interest rate is 2%, and the actual inflation rate is 4%, what is the actual real interest rate?
-2%
actual real interest rate = nominal interest rate minus actual inflation rate. (2%-4% =-2%)
When households begin to save more, this curve shifts right in the loanable funds market.
What is the supply of loanable funds?
A seasonal worker who is in between jobs is identified as this type of unemployed
What is frictionally unemployed?
The Federal Reserve moved to this framework after 2008.
What is the ample reserves framework?
When the US increases government spending, the supply of loanable funds will shift left, increasing this.
What is the real interest rate?
Assume that the reserve requirement is 20%. If a bank has no excess reserves, and $10,000 cash is deposited, the maximum amount by which this bank may increase its loans is?
What is $8,000
(.20*$10,000)
The "y-axis" of the reserve market graph.
What is the policy rate?
The dual mandate of the Federal Reserve requires the US Central Bank to do what?
Maintain stable prices and promote full employment
The banking system is Econland has ample reserves. Identify a monetary policy action that could be implemented to reduce inflation?
What is increase administered rates?
SNAP benefits and the progressive income tax system are examples of this.
Automatic stabilizers
In an economy, Real GDP (base year = 1996) is $125 billion and the Nominal GDP is $150 billion. Calculate the GDP deflator.
What is $120 billion?
(Divide nominal GDP by the real GDP and multiply times 100)
In a limited reserves framework, the central bank may engage in this open market operation to increase the money supply
What is buy bonds?