Econ Basics
Unlimited Wants/Needs but Limited Resources
Scarcity
Where factors of production are exchanged
Factor Market
Changes in consumer spending, investment spending, government spending or net exports
Aggregate Demand Shifters
Price of previously issued bonds and interest rates
Inverse Relationship
How banking system creates money
Fractional Reserve Banking
What we give up when we make our #1 choice
Opportunity Cost
Total dollar value of final goods and services produced within a country's borders in a given time period
Gross Domestic Product
1/1-MPC
Spending Multiplier
Most liquid forms of money - cash and demand deposits
M1
1/reserve requirement
Money Multiplier
Producer with lowest opportunity cost
Comparative Advantage
Adding rent, wages, interest and profits
Income Approach to Calculating GDP
Change in resource prices, change in actions of the government and/or change in productivity
Aggregate Supply Shifters
Nominal interest rate - inflation =
Real Interest Rate
Illustration of the relationship between the nominal interest rate and the quantity of money demanded
Money Market Model/Graph
Change in resource quantity/quality
Change in technology
Change in trade
Production Possibilities Curve Shifters
Frictional and Structural Unemployment
Natural Rate of Unemployment
Full Employment Output/Productivity
Long Run Aggregate Supply
Medium of exchange, unit of account and store of value
Functions of Money
Open market operations, reserve requirement and discount rate
Tools of Monetary Policy with Limited Reserves
Disequilibrium resulting in a shortage
Price Ceiling
Graph of real GDP over time
Business Cycle
Progressive Income Tax and Government Social Support Programs
Auto Stabilizers
Currency in circulation and bank reserves
Monetary Base
When the real interest rate is such that the quantities demanded and quantities supplied of loanable funds are equal
Equilibrium in the Loanable Funds Market