Money & Banking
The three basic functions of money.
What are medium of exchange, unit of account, and store of value?
The Fed’s main policy tool used to increase or decrease the money supply.
What are open-market operations?
Government spending minus tax revenue.
What is the budget deficit?
The curve that shows the inverse short-run relationship between inflation and unemployment.
What is the Phillips Curve?
Exports minus imports.
What is net exports?
This sport is known as “the king of sports” worldwide due to its global popularity.
What is soccer?
This is the most liquid type of money.
What is currency in circulation?
A decrease in the federal funds rate tends to do this to aggregate demand.
What is increase aggregate demand?
This describes changes in taxes or spending to stabilize the economy.
What is fiscal policy?
The long-run aggregate supply curve is vertical because of this concept.
What is money neutrality (or full employment output)?
When a currency becomes more valuable in foreign exchange markets.
What is appreciation?
The number of points awarded for a touchdown in American football before the extra point attempt.
What is six?
The amount banks are legally required to hold from deposits.
What are required reserves?
The interest rate the Fed charges commercial banks.
What is the discount rate?
An example of an automatic stabilizer.
What are unemployment benefits (or progressive income taxes)?
Persistent inflation is caused primarily by this.
What is excessive growth in the money supply?
A rise in the real exchange rate makes domestic goods do this relative to foreign goods.
What is become more expensive?
This NBA player holds the record for the most career points scored.
Who is LeBron James?
When banks loan out excess reserves, this process expands the money supply.
What is fractional-reserve banking?
Monetary policy is considered “tight” when the Fed does this.
What is raising interest rates or selling bonds?
When government borrowing pushes up interest rates and reduces private investment.
What is crowding out?
Productivity growth depends mainly on labor, capital, and this factor.
What is technology?
The account that tracks trade in goods and services, income, and transfers.
What is the current account?
In baseball, this statistic measures how often a pitcher strikes out hitters per nine innings.
What is K/9?
The formula for the simple money multiplier.
The formula for the simple money multiplier.
The time lag between the Fed’s decision and when it affects the economy.
What is the outside lag of monetary policy?
The multiplier effect makes fiscal policy stronger when this condition is true.
What is when the marginal propensity to consume is high?
When expected inflation rises, this happens to the short-run Phillips Curve.
What is it shifts upward?
In equilibrium, the current account + financial account always equals this.
What is zero?
This endurance event starts with a swim, continues with a bike ride, and ends with a marathon run.
What is an Ironman Triathlon