RANDOM
Any point found on the PPC is considered to be
efficient use of resources
THE SLOPE OF THE AGGREGATE DEMAND CURVE IS _________.
NEGATIVE
When the central bank intervenes with monetary policy, the _________ curve is expected to shift.
money supply
interest rates could be seen as the ________ of borrowing money from a financial institution.
price
IF ONE CURRENCY DEPRECIATES, THEN THE OTHER CURRENCY ____________
APPRECIATES
The acronym O.O.O stands for
output, other goes over
THE 4 COMPONENTS OF AGGREGATE DEMAND ARE _______, ______, __________, AND __________.
CONSUMER SPENDING
BUSINESS INVESTMENTS
GOVERNMENT SPENDING
NET EXPORTS
price level and technology can shift the _______ curve.
demand for money
IF INTEREST RATES ARE LOW, YOU COULD EXPECT WHICH 2 GROUPS TO BEGIN BORROWING
CONSUMERS AND BUSINESSES
demanded
If MPC is 75%, what is the spending multiplier?
MPS =.25
1/.25 =
S.M = 4
WHEN THE ECONOMY IS ALLOWED TO SELF-CORRECT, YOU COULD EXPECT THIS CURVE TO SHIFT
AGGREGATE SUPPLY
If money supply has increased and interest rates have dropped, you could assume ___________ monetary policy action was taken.
expansionary
MEXICO IS CURRENTLY BUYING U.S BONDS AND TREASURIES. YOU COULD ASSUME U.S INTEREST RATES ARE ___________.
HIGH
If you have a current account surplus (relative to your trading partner), then your currency is currently _____ relative to the other country.
up
appreciated
higher
WHEN unemployment is up and prices are up, the economy is more than likely experiencing _________.
Stagflation
WHEN THERE IS ECONOMIC GROWTH, YOU CAN EXPECT ________ TO SHFIT OUTWARD
LRAS
Aggregate demand has decreased, lowering real GDP. What open market operation could you assume the central bank engaged in?
Central bank sold bonds.
HOW DOES LOW PRICE LEVEL AFFECT INTEREST RATES?
DEMAND FOR MONEY OR LOANS WILL DECREASE, LOWERING INTEREST RATES.
If China has a financial account deficit, then you could assume their interest rates are ______________ relative to other countries.
low
If demand deposits equal $1,000 and $900 is out in loans, and $100 is in reserves, what is the potential increase in total Money Supply?
1/.1 = 10
$900 * 10 = $9000
When the government implements contractionary fiscal policy, aggregate demand should _________. In the long run, the economy will return to full employment by way of short run supply ________ due to _______ costs of resources.
decrease, increasing, low
In an economy with ample reserves experiencing inflation, what specific policy could the central bank engage in?
central bank could raise the interest on reserves
GOVERNMENT SPENDING HAS EXCEEDED TAX REVENUES. HOW WILL THIS IMPACT real GDP?
THIS WILL LEAD TO GOVERNMENT BORROWING, INCREASING DEMAND FOR LOANS, RAISING INTEREST RATES, DECREASING I or C, DECREASING AD, DECREASING real GDP.
How would "crowding out" affect the USD exchange rate?
ir up, bond prices down, leading to capital account surplus ("they're" buying our bonds, Demand USD goes up, APPRECIATES USD.