Money
Any asset that can easily be used to purchase goods and services.
What is money?
Payments by the government to
households for which no good or service is provided in
return
What is government transfers?
Government programs (transfer
payments) intended to protect families against economic
hardship
What is social insurance?
The three mechanisms of the federal reserve.
What are open market operations, reserve requirements, and the discount rate.
The three functions of money.
What is medium of exchange, store of value, and unit of account?
The time it takes for the policy to
work.
What is outside lag?
The time it takes to acknowledge and
react/respond.
What is inside lag?
The two parts that make up the Federal Reserve.
What are the board of governors and the 12 regional Federal Reserve Banks?
The three types of money.
What is commodity money, commodity-backed money, and fiat money?
The methods used by expansionary policy.
An increase in government purchases of goods and services. A cut in taxes. An increase in government transfers.
Methods used by contractionary policy.
What is a reduction in government purchases of goods and services. An increase in taxes. A reduction in government transfers
The interest rate that the federal reserve charges on loans to banks.
What is the discount rate?
Includes only the most liquid forms of money.
What is M1?
The type of gap expansionary policy closes.
What is a recessionary gap?
The type of gap contractionary policy closes.
What is an inflationary gap?
The affect on the interest rates when the Federal Reserve buys bonds.
What is the interest rates fall?
Includes M1 and near-moneys.
What is M2?
The direction of the aggregate demand curve's shift.
What is a shift to the right?
The direction of the aggregate demand curve's shift.
What is a shift to the left?
The affect on the interest rates when the Federal Reserve sells bonds.
What is interest rates rise?