Potent Potables
coins and bills in the hands of the public
What is currency?
the use of taxes and spending to influence aggregate demand and through it the level of overall economic activity
What is fiscal policy?
a sudden rush of depositors seeking to withdraw funds from the banking system
What is a bank run?
the fraction of deposit liabilities that banks hold to meet depositor withdrawals
What are reserves?
he difference between actual output and potential output
What is output gap?
the rate that banks charge other banks when they lend reserves
What is the federal funds rate?
the ease with which a nonmonetary asset may be converted into money
What is liquidity?
the interest rate that the Federal Reserve charges banks when they must borrow reserves from it
What is the discount rate?
Money in the bank
What are apple plates?
the amount of reserves that the Federal Reserve requires banks to hold
What are reserve requirements?
a graphical depiction of the relationship between the level of desired expenditures in an economy and the price level
What is the aggregate demand curve?
a graphical depiction of the relationship between the level of desired expenditures in an economy and the price level
What is the aggregate supply curve?
the quantity of money available to the economy
What is the money supply?
the decrease in private investment that occurs as a result of a reduction in government saving or an increase in government borrowing
What is crowding out?
Beverage
What is Finz's favorite word?
a relationship identified by Arthur Okun between the output gap and the level of cyclical unemployment
What is Okun's law?
the quantity of currency plus bank reserves
What is the monetary base?
the ratio of nominal GDP to the money supply; in effect, the average number of transactions supported by each dollar of the money supply
What is the velocity of money?
the quantity of output that would be produced by an economy if all of its resources were being employed at normal rates
What is potential output?
a tool used by the Federal Reserve to adjust the money supply by buying or selling U.S. government bonds in the financial market
What are open market operations?
the ratio of the money supply to the monetary base
What is the money multiplier?
the use of the supply of money in the economy by the Federal Reserve to influence the level of aggregate demand
What is monetary policy?
a model of short-run aggregate economic fluctuations inspired by the analysis of British economist John Maynard Keynes, which attributes short-run deviations in output from potential to variations in the level of aggregate demand or aggregate supply
What is the Keynesian model?
the level of unemployment that would exist if the economy were producing at its potential output
What is the natural rate of unemployment?
the proposition that in the long run, changes in the quantity of money affect the price level but do not affect any real quantities
What is the neutrality of money?