Financial Sector
The x-axis on a money market graph
What is the Quantity of Money?
The percent change in prices over a period of time
What is inflation?
Firms are this in a perfectly competitive market
What is price takers?
In a limited reserves market, the central bank can increase the money supply by buying bonds, lowering the required reserves ratio, and this
What is decreasing the discount rate?
This institution conducts fiscal policy
What is the government?
The two factors that make up the monetary base
What is currency in circulation and bank reserves?
This indicator measures changes in price in a fixed market basket
What is CPI (Consumer Price Index)?
This is zero for perfectly competitive firms in the long-run
What is economic profit?
In an ample reserves regime, this action decreases the policy rate
What is decreasing the administered rates?
The type of fiscal policy conducted by the government when unemployment is too high
What is expansionary fiscal policy?
One of the three main functions of money that allows you to buy things using money
What is medium of exchange?
The Nominal GDP adjusted for changing price levels
What is the Real GDP?
Perfectly competitive firms produce at this point
What is the point where Marginal Revenue meets Marginal Cost?
Doing this to the money supply in a limited reserves market will close an inflationary gap
What is decreasing the money supply?
When conducting expansionary fiscal policy, the government decreases taxes and increases this
What is government spending?
This Open Market Operation decreases the money supply
The lowest point in the business cycle
What is the trough?
Total production decreases in this stage of the production cycle
What is Stage III of the production cycle?
The x-axis on an ample reserves market graph
What is the quantity of reserves?
The goal of contractionary fiscal policy is to close this
What is an inflationary gap?
The effect of increased government deficit spending on the loanable funds market
What is an increase in demand for loanable funds and an increase in the real interest rate?
This type of unemployment causes jobs to disappear during a recession
What is cyclical unemployment?
This concept causes the additional output of each variable resource to fall
What is the law of diminishing marginal returns?
As the money supply increases, this decreases
What is the nominal interest rate?
This is defined as 1/MPS, and it is multiplied by the amount of government spending to close an output gap
What is the expenditure multiplier?