General Macro
Write the GDP Formula
What is C + I + G + (X - M)?
2 determinants of Aggregate Demand
Components of GDP
Taxes, Transfer Payments
Tax Rate is associated with which policy?
Fiscal
Who decides Fiscal Policy
Government
Who decides monetary policy?
Federal Reserve
3 types of unemployment
What are frictional, structural, cyclical?
2 requirements to be unemployed
Without a job and looking for a job
Describe the Fed and their job.
Central Bank responsible for Monetary Policy
2 tools of fiscal policy
government spending & taxes?
3 tools of Monetary Policy
Interest Rates, Bonds/Government Securities, Required Reserves
These groups are hurt by unanticipated inflation
What are savers, lenders, retirees?
3 Goals of Policy Makers
Full employment
economic growth
price stability
3 functions of money
Medium of exchange
Store of value
Standard of value?
Fiscal policy is used
When there is a Recessionary Gap or Inflationary Gap?
Monetary Policy is used
When there is a Recessionary or Inflationary Gap
How does inflation affect : 1)value of money 2) amount in circulation 3) prices
What is :
1)value decreases
2)amount increases
3)prices increase
2 determinants of Aggregate Supply
Production Cost
Productivity
relationship between national debt and deficit
What is a deficit will cause the national debt to increase?
Economy experiencing rapid inflation above 33% the government responds
Contractionary fiscal policy
Fed has purchased a lot of bonds from banks recently, this indicates...
A recession
Describe the situation in an expansion and a contraction.
Expansion -- GDP, AD, AS up, UNE down, inflation Contraction -- GDP, AD, AS down, UNE up, deflation
Phases of the Business Cycle
Expansion
Recession
How will a tax increase impact saving and spending
Saving will go up and spending will go down
Government spending increases. How does this affect unemployment and price levels
unemployment decreases and price levels increase?
Increase in Discount Rate, effect on consumer spending
consumer spending will decrease