Macro 1
What are the 3 Macroeconomic goals?
Promoting economic growth
Limiting unemployment
Keeping prices stable
What is the inflation rate? how do you calculate it?
new-old/oldx100 OR
current-previous/previousx100
Draw and label the 4 phases of the business cycle
Expansion – Peak – Contraction – Trough
What is the FED and what is the job of the FED?
regulate banks and make sure people have faith in the U.S. financial system.
What is GDP? Define it
The dollar value of all final goods and services produced within a country in one year is
What is CPI and how do you calculate it?
Consumer price index- measures the spending of consumers
Price of basket of goods
______________________ X 100
Price of Market Basket in Base year
What two fiscal policy tools does the government have
government spending and taxes
What is deficit spending?
when annual government spending and transfer payments are greater than tax revenue.
Deficit spending contributes to the national debt.
What is the best way to measure the overall health of a country? How do you measure it?
GDP/Population
List and describe the four types of unemployment?
Frictional unemployment-between jobs
Seasonal unemployment
Structural unemployment-Technology
Cyclical unemployment-Recession
What two fiscal policy tools are expansionary fiscal policy?
Decrease taxes and increase government spending
The Fed has 3 ways to conduct Monetary Policy. What is the reserve requirement?
The percent banks must hold onto when a customer makes a deposit
List and explain the expenditure approach to GDP
C + I + G + (Xn)
Consumer spending, Business Investment spending, Government spending and Net Exports
What is the Natural Rate of Unemployment range?
4-6%
What two fiscal policy tools are contractionary fiscal policy
The Fed has 3 ways to conduct Monetary Policy. What is the discount rate
The discount rate is the interest rate the FED charges when commercial banks want to borrow money
What are some limitations to GDP?
GDP per capita does not accurately measure all of the spending that takes place in a country.
Time spent collecting trash from the side of the road
Donations collected at a local church for the town’s food pantry
Money spent of illegal drugs
What is the NRU never 0%
Because there is always frictional and structural unemployment
What are the 3 functions of money?
Medium of exchange, unit of account, store of value
The Fed has 3 ways to conduct Monetary Policy. What are open market operations?