Macro Pt 1.
What are the three (3) Macroeconomic goals?
Economic growth, price stability and unemployment
what does the "C" "I" "G" and "Xn" stands for in GDP=C+I+G+Xn?
C = Consumer Spending
I = Investment or Business spending
G = Government spending
Xn = Foreign countries
What are Macroeconomics Purpose?
Measure the economy’s health primarily with 3 vitals
Discount Rate...
If financial institutions cannot borrow from each other, they may need to borrow from the Federal Reserve. The interest rate charged by the Fed, when lending to a financial institution, is the Discount Rate.
What is one fiscal policy tools?
taxes
How do we measure the vitals of Economic growth, unemployment and price stability
Economic growth Real GDP
Price stability Consumer Price Index
unemployment Unemployment rate
What 3 conditions must exist to qualify as consumer spending?
1. final goods and services
2. given time period
3. a country’s borders
What does Full employment mean?
When virtually all who are willing and able to work have the opportunity to do so.
fiscal policy refers to what?
fiscal policy refers to legislation, passed by Congress and signed into law by the President, changing levels of taxation and/or government spending to stabilize the economy.
What are the 3 functions of money?
medium of exchange
standard of value
unit of account
store of value
What does CPI stand for and does it mean?
The Consumer Price Index (CPI) and measures the change in value of a basket of goods and services purchased by the average urban consumer.
What are Capital goods Inventories and New home versus repurchase?
Three conditions must exist to qualify as Investment or Business spending
Why is economic growth important?
Jobs,
More goods and services
A greater variety of goods and services
DEFICIT is ...
DEFICIT is the amount the government overspends
Peak, Trough, Expansion, Contraction, Recession and Depression are all words from what?
Draw it add time and Real GDP
The business cycle
What do GDP stand for and what does it mean?
GDP = Gross Domestic Products
GDP is spending at current prices
What is Government spending?
Is the monetary value of any spending on final goods and services by a local, state, or national government in a given time period
Open market operations...
Fed buys bonds from big businesses and banks to put money in the economy
Fed sells securities to big businesses and banks to take money out of the economy
Surplus...
Government spends less than it takes in in taxes
What is The Federal Reserve System?
The Federal Reserve System is the central bank for the United States.
Identify seasonal, structural, cyclical, and frictional unemployment and if their short or long run.
Seasonal are unemployed because employers need their type of human capital during only one part of the year. (Long-run)
Structural are unemployed because their human capital does not match the needs of employers hiring in the labor market. (Long-run)
Cyclical The cyclically unemployed are unemployed due to a downturn in overall economic activity. (Short-run)
Frictional are unemployed because they are graduating from high school or college, looking for better working conditions, or seeking a higher wage. (Long-run)
What is Net exports?
refers to the monetary value of all final goods and services produced in one country but sold outside the country’s borders minus the monetary value of all final goods and services produced outside the country’s borders but sold within the country in a given time period. In other words, the value of a country’s exports minus the value of a country’s imports in a given time period.
Reserve requirement...
The Federal Reserve requires most financial institutions to keep a percentage of customer deposits in vault cash or as a deposit in their account with the Federal Reserve. Banks cannot lend these reserves. In theory, if the Federal Reserve raised or lowered the reserve requirement, it would change the supply of money in the economy.
which Policy controls the money supply?
monetary policy
What is aggregate demand and aggregate supply?
Aggregate supply is the total quantity of output firms will produce and sell—in other words, the real GDP.
Aggregate demand is the amount of total spending on domestic goods and services in an economy.