Monetary Policy
Monetary policy refers to the actions taken by ______________, to influence the amount of money circulating in an economy and the cost of borrowing.
What is the Central Bank / Federal Reserve?
Fiscal Policy refers to _____________ use of spending and taxation to influence the economy, aiming to promote sustainable growth and manage economic conditions by adjusting its budget balance through changes in revenue collection and expenditure levels.
What is the Government / Congress?
A model that illustrates how the total quantity of goods and services produced in an economy, interacts with the total demand for those goods and services.
What is the Aggregate Supply and Aggregate Demand (The AS/AD Model)?
Draw the Model for double the points.
The resource used to develop steady, long-run economic growth. Usually by supporting or subsidizing human development, technology, infrastructure, or investment.
What is Capital?
The amount of money that the banking system can create for each dollar of reserves.
1 / the Reserve Ratio
What is the Money Multiplier?
The buying and selling of government securities by the Federal Reserve to control the money supply and influence interest rates.
What are Open Market Operations?
Discretionary Fiscal Policy is largely dependent upon the time it takes to implement the policy, the level of disposable income for consumers, and nature of the policy passed.
What are the problems / short comings of Discretionary Fiscal Policy.
An economic model describing the supply and demand for money in a nation.
What is the Money Market Model?
Draw the Model for double the points.
An economic system where banks hold only a small amount of reserves compared to their deposits.
What is a Limited Reserve system?
Describe an a Ample Reserve System for double the points.
How much economic output increases with an increase in spending.
1 / (1-MPC) = 1 / MPS
What is the Spending Multiplier?
The amount of funds that a bank holds in reserve to ensure that it is able to meet liabilities in case of sudden withdrawals.
What are Reserve requirements?
When taxes and spending are adjusted congress to compensate for a recession.
What are Expansionary Discretionary Fiscal Policies?
A model that represents the interaction between borrowers and savers , where the equilibrium interest rate is determined based on the supply and demand for money available for loans within an economy.
What is the Loanable Funds Market?
Draw the Model for double the points.
A Increase in the value of one currency against another currency.
What is (currency) appreciation?
Consumption + Gross Investment + Government Spending+ (Exports – Imports)
GDP Formula - Output Expenditure Model
For double point write the Income Approach equation.
Discretionary Monetary Policies that allows the central bank to influence the money supply.
What is the Discount Rate/federal funds rate, and what is the interest on reserve balances (IORB)?
Taxes and Social & Economic Welfare are fiscal policies that do not require new laws or delays in response time, making it quicker to implement during economic crises.
What are Non-discretionary/ Automatic Stabilizers?
The recurring pattern of economic expansion and contraction that an economy experiences over time.
What is the Business Cycle?
Draw is for double the points.
This is the global marketplace for trading currencies. It's the world's largest and most liquid financial market, with trillions of dollars changing hands every day.
What is the FOREX / Foreign exchange market?
A measure of the average change over time in the prices paid by consumers for a representative basket of consumer goods and services.
New Market Basket Value/Base Market Basket Value x 100
What is the Consumer Price Index (CPI)?
The Federal Reserve (AKA Central Bank) regulates the money supply through open market operations (buying and selling bonds or securities), discount rate, reserve requirement through this Market.
What is the Money Market?
Draw the Model for double the points.
When government spending exceeds tax revenue. Which intern increases __________.
What is a Budget Deficit? National Debt.
An economic concept that illustrates an inverse relationship between unemployment and inflation, meaning that when unemployment is low, inflation tends to be high, and vice versa.
What is the Philips Curve?
Draw the Model for double the points.
The difference between the monetary value of a country's exports and its imports over a specific period of time.
This measures changes in the prices of goods and services produced in the United States, including those exported to other countries.
Nominal Value/Real Value x 100.
What is the GDP Deflator?