Monetary
Policy
Policy
Monetary policy is done by this government agency.
What is the Federal Reserve? (Fed)
The Phillips Curve shows the relationship between these two economic measures.
What are unemployment and inflation?
This describes the shape of the Long Run Phillips Curve.
What is vertical?
This is how a budget deficit impacts the national debt.
What is it increases the national debt?
This is how economic growth is reflected on the AD/AS model graph.
What is a right shift of LRAS?
These three tools are used by the Fed to do monetary policy when there are limited reserves.
What are (1) reserve requirement, (2) discount rate, (3) open market operations?
This is what the Y axis (vertical) represents in the money market graph.
What is the nominal interest rate?
What is a right shift of the SRPC?
An increase in deficit spending would have this impact on AD in the short run.
What is an increase in AD? (Right shift)
This is how much a bank's required reserves would change if the Fed bought $1,000 worth of bonds from that bank and the reserve requirement is 20%.
What is $0 dollars?
Anything that affects this group of people or businesses, shifts the demand for loanable funds.
Who are borrowers?
This is the identity (formula) that shows the quantity theory of money.
What is MV=PY?
M=Money supply
V= Velocity of money
P= Price level
Y = Output
This is how crowding out impacts the real interest rates.
What is increase?
This type of policy aims to give tax breaks or subsidies to businesses in order to increase economic productivity.
What is supply side policy?
These are the two "administered" rates of the Fed.
What is the discount rate and the interest on reserves rate?
This rate serves as a "ceiling" on the policy rate or federal funds rate. This can been seen in the market for reserves graph.
What is the discount rate?
This is how simultaneous contractionary monetary policy and expansionary fiscal policy would impact unemployment in the short run.
What is indeterminate? One increase one decrease
This is how real GDP would be impacted if the government increases spending by $50 million and increases taxes by $50 million.
What is an increase in real GDP?
This is how an increase in consumer spending would impact economic growth in the long run.
What is no change?
This includes currency and bank reserves. It is smaller than the money supply in direct proportion to the reserve requirement.
What is the monetary base?
An increase in capital inflow would be reflected this way on the loanable funds graph.
What is a right shift of the supply of loanable funds?
This is the price level if, in an economy, the money supply is $800 billion, the velocity of money is 5, and the real GDP is $4,000 billion.
What is 1?
MV=PQThis how an increase in deficit spending affects economic growth in the long run.
What is decrease growth?
Higher interest rates cause less business investment - decreased capital slows economic growth
In the production function graph, this is what shifts the curve.
What is changes to technology?