Macro Unit 2
What is consumer spending, government spending, investment, and net exports?
(1/1-MPC) x 100
What is the spending multiplier?
This is the central bank of the United States, responsible for monetary policy.
What is the Federal Reserve?
This curve shows the total quantity of goods and services demanded across all levels of an economy at a given price level.
What is the Aggregate Demand curve?
This measures all international transactions in a year, including exports, imports, and the purchase and sale of assets.
What is the balance of payments?
New machinery, inventories, and productive capital are all examples of what type of spending:
What is investment spending?
in the long run, nominal wages are _____
What is the flexible, NOT sticky?
This term refers to the portion of a bank's deposits that must be kept in reserve and not lent out.
What is the reserve requirement?
This type of fiscal policy involves increasing government spending and/or decreasing taxes to stimulate economic activity.
What is expansionary fiscal policy?
The difference between a nation's exports of goods and services and imports of goods and services.
What are net exports (XN)?
When there's high unanticipated inflation, the ones who benefit are:
What is borrowers?
wages, cost of inputs, cost of energy
What are the shifters of SRAS?
This is the interest rate at which commercial banks can borrow from the Federal Reserve.
What is the discount rate?
This concept suggests a short-term inverse relationship between the rate of inflation and the unemployment rate.
What is the Phillips Curve?
100 yen now buys 1 US dollar instead of 120 yen. Which currency has appreciated?
What is the yen?
Intermediate goods, used goods, financial assets, transfer payments, and goods/services produced in other countries.
What is NOT included in GDP?
An increase in price level decreases purchasing power which is one reason why the AD is downward sloping.
What is the real wealth effect?
Crowding out in the loanable funds market occurs when this happens.
What is an increase in borrowing from the government?
This term refers to the long-term increase in a country's productive capacity and potential output.
What is economic growth?
If inflation rises in Mexico at a higher rate than the US, what will happen to the dollar and the peso?
The dollar will appreciate, and the yen will depreciate.
Land, labor, capital, and entrepreneurship
What are the factors of production?
This fiscal policy requires action by the government
What is discretionary fiscal policy (non automatic)?
In an ample reserves graph, this causes a decrease in the policy rate.
What is a decrease in the IOR rates?
This term describes a situation where aggregate demand exceeds aggregate supply, leading to a rise in the price level.
What is demand-pull inflation?
In the foreign exchange market for the US dollar relative to the Euro, what will happen if the real interest rate in the US increases?
Supply will decrease, and demand will increase.