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What makes the supply of money inelastic?
It is set up by the fed
How is the money multiplier is calculated?
Taking the reciprocal of the reserve requirement
What is used to measure inflation?
CPI and the GDP deflator
What is the purpose of real GDP?
What is a solvent bank?
A bank whose assets exceed liabilities, cannot pay everyone
What makes up GDP? (in words not the equation)
All the final goods and services produced within a country
What is an intermediary? What two intermediaries are described in our guide?
An intermediary is a third party connecting other actors. We learned about banks and mutual funds.
The United States has had positive inflation since?
WW2
What is the precise definition of the long run?
The long run is the time period for the price level to adjust such that Dmoney= Smoney
Where does wealth enter the economy in the circular flow model?
Households
CPI in the base year is always what?
100
What is expansionary policy? What is contractory policy?
Expansionary fiscal policy increases government spending and/or lowers taxes
Contractionary fiscal policy decreases government spending and/or increases taxes
What is the labor force, what is the participation rate?
The labor force is the amount of people who are working and are looking for work. The participation rate is the percentage of the population who are in the labor force.
12 regional banks, a 7 member board, and the Federal Open Market Committee
The expenditure approach to GDP gives what equation for GDP. Give the full word for each variable
The expenditures approach says GDP = expenditures = C + I + G + NX
How can you use the GDP deflator to tell the state of an economy's inflation?
When the GDP deflator equals 100 there is no inflation. Less than 100 = Deflation. More than 100 = Inflation
Who measures the unemployment rate each month?
The Bureau of Labor Statistics (BLS)
Who developed GDP? Bonus 100pts for the year it was developed
Simon Kuznets, 1934
What is the difference between debt and equity finance?
Equity finance involves the sale of stocks, a share of ownership in a firm
Debt Finance involves bonds
What are the 3 types of unemployment? Name and describe them.
Structural, Cyclical, Frictional
What is a default in the context of debt finance?
When the bond purchaser declares bankruptcy and no longer need to pay the bond
Money refers to anything that served what 3 functions?
Acts as a medium of exchange
Uses a unit of account
Why did Keynes make a new model economic model?
What can causes SRAS to shift? What is the extra thing that causes it to move right passively?
Shifters:Shocks, changes in expected price level.
Passive:Technological Advancement
The Quantity Theory of money is what?
M x V = P x Y = nominal GDP
What Pokemon do the emojis describe
Oshawott
What are the 5 factors that contribute to average labor productivity?
Physical Capital
Human Capital
Technological knowledge
Political and legal environment
Standard of living
WHO CAN BUZZ THE FASTEST? DONT WAIT FOR ME TO READ!!
woah that was fast
What is Okun's Law?
Okun’s Law states that for every 1% the unemployment rate differs from the natural rate of unemployment, the output gap deviates by 2%
What is the main idea behind Keynesian Economics?
The Keynesian model implies that the economy’s aggregate production and price level are determined by the intersection of AD and short run AS