Money,GDP,inflation,Fiscal Policy,Taxes,and Tariffs

question

barter economy

answer

an economy in which trades are made in goods and services instead of money

question

transaction costs

answer

the costs associated with the time and effort needed to search out, negotiate, and consummate an exchange

question

money

answer

a good that is widely accepted for purposes of exchange and in the repayment of debt

question

medium of exchange

answer

anything that is generally acceptable in exchange for goods and services

question

unit of account

answer

A common measurement used to express values.

question

store of value

answer

something with the ability to hold value over time

question

money supply

answer

The total supply of money in circulation, composed of currency, checking accounts, and traveler's checks.

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currency

answer

coins issued in the U.S. Treasury and paper money issued by the Federal Reserve System

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Federal Reserve note

answer

Paper money issued by the Federal Reserve System.

question

demand deposit

answer

an account from which deposited funds can be withdrawn in currency or transferred by a check to a third party at the initiative of the owner

question

savings account

answer

An interest-earning account.

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near-money

answer

assets, such as nonchecking savings accounts, that can be easily and quickly turned into money

question

loanable funds market

answer

the market for loans. There is a demand for loans and a supply of loans. Its the loanable funds market where the intrest rate is determined

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the Fed

answer

the central bank of the united states

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Board of Governors

answer

The governing body of the Federal Reserve System

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FOMC

answer

the 12-member policy-making group within the Fed. This committee has the authority to conduct open market operations. Seven members from the Board of governors and five from the Federal Reserve District Banks

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reserve account

answer

a bank's checking account with its Federal Reserve district bank

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total reserves

answer

The sum of a bank's deposits in its reserve account at the Fed and its vault cash.

question

required reserves

answer

the minimum amount of reserves a bank must hold against its deposits as mandated by the fed

question

reserve requirement

answer

A regulation which requires a bank to keep a certain percentage of each dollar deposited in the bank in its reserve account at the Fed or in its vault (as vault cash)

question

excess reserves

answer

any reserves held beyond the required amount

question

open market operations

answer

Buying and selling of government securities by the Fed

question

federal funds rate

answer

the interest rate one bank charges another for a loan

question

discount rate

answer

The interest rate the Fed charges a bank for a loan

question

gross domestic product

answer

the total market of all final goods and services produced annually in a country

question

double counting

answer

counting a good more than once in computing GDP

question

consumption

answer

expenditures made by the household sector

question

investment

answer

Expenditures made by the business sector

question

government purchases

answer

expenditures made by the government sector

question

export spending

answer

The amount spent by the residents of other countries for goods produced in the U.S.

question

import spending

answer

The amount spent by Americans for foreign-produced goods

question

unemployment rate

answer

the percentage of the civilian labor force that is unemployed

question

employment rate

answer

percentage of the noninsituional adult civilian population that is employed

question

inflation

answer

an increase in the price level, or average level of prices

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demand-side inflation

answer

an increase in the price level that originates on the demand side of the economy

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supply-side inflation

answer

an increase in the price level that originates on the supply side of the economy

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velocity

answer

the average number of times a dollar is spent to buy final goods and services in a year

question

simple quantity theory of money

answer

a theory that predicts that changes in the price level will be strictly proportional to changes in the money supply

question

hedge

answer

to try to avoid or lessen a loss by taking some counterbalancing action

question

deflation

answer

A decrease in the general price level, or average level of prices

question

base year

answer

The year chosen as a point of reference or basis of comparison for prices in other years; a benchmark year.

question

real GDP

answer

GDP that has been adjusted for price changes; GDP measured in base-year, or constant, prices

question

price index

answer

a measure of the price level, or the average level of prices

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consumer price index (CPI)

answer

the most widely cited price index

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aggregate demand curve

answer

shows the quantity of goods and services buyers are willing and able to buy at different price levels

question

aggregate supply curve

answer

A curve that shows the quantity of goods and services that producers are willing and able to supply at different price levels

question

unemployment rate

answer

the percentage of the civilian labor force that is unemployed

question

employment rate

answer

percentage of the noninstitutional adult civilian population that is employed

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business cycle

answer

recurrent swings(up and down) in real GDP

question

recession

answer

a slowdown in the economy marked by real GDP falling for two consecutive quarters

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absolute real economic growth

answer

an increase in real GDP from one period to the next

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per capita real economic growth

answer

an increase from one period to the next in per capita real GDP, which is real GDP divided by population

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human capital

answer

the knowledge and skill that people use in the production of goods and services

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fiscal policy

answer

Changes government makes in spending or taxation to achieve particular economic goals

question

expansionary fiscal policy

answer

An increase in government spending or a reduction in taxes

question

contractionary fiscal policy

answer

A decrease in government spending or an increase in taxes

question

crowding out

answer

The situation in which increases in government spending leads to reductions in private spending.

question

crowding in

answer

the situation in which decreases in government spending lead to increases in private spending

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after-tax income

answer

the part of income that's left over after taxes are paid

question

Laffer curve

answer

The curve, named after Arthur Laffer, that shows the relationship between tax rates and tax revenues. According to the Laffer curve, as tax rates rise from zero, tax revenues rise, reach a maximum at some point, and then fall with further increases in tax rates.

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monetary policy

answer

changes the Fed makes in the money supply

question

expansionary monetary policy

answer

an increase in the money supply

question

contractionary monetary policy

answer

a decrease in the money supply

question

stagflation

answer

The occurrence of inflation and high unemployment at the same time

question

stop-and-go,on-and-off monetary policy

answer

an erratic monetary policy

question

proportional income tax

answer

An income tax that everyone pays at the same rate, whatever the income level

question

progressive income tax

answer

An income tax whose rate increases as income level rises. Progressive income tax structures are usually capped at some rate.

question

regressive income tax

answer

an income tax whose rate decreases as income level rises

question

national debt

answer

the sum total of what the federal government owes its creditors

question

budget deficit

answer

the situation in which federal government expenditures are greater than federal government tax revenues

question

budget surplus

answer

situation in which federal government expenditures are less than federal government tax revenues

question

exports

answer

goods produced in the domestic country and sold to residents of a foreign contry

question

imports

answer

goods produced in foreign countries and purchased by residents of the domestic country

question

balance of trade

answer

the difference between the value of a country's exports and the value of its imports

question

absolute advantage

answer

the situation in which a country can produce more of a good than another country can produce with the same quantity of resources

question

specialize

answer

To do only one thing. For example, when a country specializes in the production of a good, it produces only that good.

question

comparative advantage

answer

the situation in which a country can produce a good at lower opportunity cost than another country

question

outsourcing

answer

the term used to describe work done for a company by another company or by people other than the original company's employees

question

tariff

answer

tax on imports

question

dumping

answer

the sale of goods abroad at prices below their costs and below the price charged in the domestic markets

question

exchange rate

answer

the price of one nation's currency in terms of another nation's currency

question

flexible exchange rate

answer

the system whereby currency exchange rates are determined by the forces of supply and demand

question

fixed exchange rate system

answer

The system whereby currency exchange rates are fixed, or pegged, by countries' governments.

question

depriciation

answer

a decrease in the value of one currency relative to other currencies

question

appreciation

answer

an increase in the value of one currency relative to other countries

question

developed country

answer

a country with a highly per capita GDP

question

less-developed country

answer

a country with a relatively low per capita GDP

question

population growth rate

answer

the birthrate minus the death rate

1 of 88

question

barter economy

answer

an economy in which trades are made in goods and services instead of money

question

transaction costs

answer

the costs associated with the time and effort needed to search out, negotiate, and consummate an exchange

question

money

answer

a good that is widely accepted for purposes of exchange and in the repayment of debt

question

medium of exchange

answer

anything that is generally acceptable in exchange for goods and services

question

unit of account

answer

A common measurement used to express values.

question

store of value

answer

something with the ability to hold value over time

question

money supply

answer

The total supply of money in circulation, composed of currency, checking accounts, and traveler's checks.

question

currency

answer

coins issued in the U.S. Treasury and paper money issued by the Federal Reserve System

question

Federal Reserve note

answer

Paper money issued by the Federal Reserve System.

question

demand deposit

answer

an account from which deposited funds can be withdrawn in currency or transferred by a check to a third party at the initiative of the owner

question

savings account

answer

An interest-earning account.

question

near-money

answer

assets, such as nonchecking savings accounts, that can be easily and quickly turned into money

question

loanable funds market

answer

the market for loans. There is a demand for loans and a supply of loans. Its the loanable funds market where the intrest rate is determined

question

the Fed

answer

the central bank of the united states

question

Board of Governors

answer

The governing body of the Federal Reserve System

question

FOMC

answer

question

reserve account

answer

a bank's checking account with its Federal Reserve district bank

question

total reserves

answer

The sum of a bank's deposits in its reserve account at the Fed and its vault cash.

question

required reserves

answer

the minimum amount of reserves a bank must hold against its deposits as mandated by the fed

question

reserve requirement

answer

A regulation which requires a bank to keep a certain percentage of each dollar deposited in the bank in its reserve account at the Fed or in its vault (as vault cash)

question

excess reserves

answer

any reserves held beyond the required amount

question

open market operations

answer

Buying and selling of government securities by the Fed

question

federal funds rate

answer

the interest rate one bank charges another for a loan

question

discount rate

answer

The interest rate the Fed charges a bank for a loan

question

gross domestic product

answer

the total market of all final goods and services produced annually in a country

question

double counting

answer

counting a good more than once in computing GDP

question

consumption

answer

expenditures made by the household sector

question

investment

answer

Expenditures made by the business sector

question

government purchases

answer

expenditures made by the government sector

question

export spending

answer

The amount spent by the residents of other countries for goods produced in the U.S.

question

import spending

answer

The amount spent by Americans for foreign-produced goods

question

unemployment rate

answer

the percentage of the civilian labor force that is unemployed

question

employment rate

answer

percentage of the noninsituional adult civilian population that is employed

question

inflation

answer

an increase in the price level, or average level of prices

question

demand-side inflation

answer

an increase in the price level that originates on the demand side of the economy

question

supply-side inflation

answer

an increase in the price level that originates on the supply side of the economy

question

velocity

answer

the average number of times a dollar is spent to buy final goods and services in a year

question

simple quantity theory of money

answer

a theory that predicts that changes in the price level will be strictly proportional to changes in the money supply

question

hedge

answer

to try to avoid or lessen a loss by taking some counterbalancing action

question

deflation

answer

A decrease in the general price level, or average level of prices

question

base year

answer

The year chosen as a point of reference or basis of comparison for prices in other years; a benchmark year.

question

real GDP

answer

GDP that has been adjusted for price changes; GDP measured in base-year, or constant, prices

question

price index

answer

a measure of the price level, or the average level of prices

question

consumer price index (CPI)

answer

the most widely cited price index

question

aggregate demand curve

answer

shows the quantity of goods and services buyers are willing and able to buy at different price levels

question

aggregate supply curve

answer

A curve that shows the quantity of goods and services that producers are willing and able to supply at different price levels

question

unemployment rate

answer

the percentage of the civilian labor force that is unemployed

question

employment rate

answer

percentage of the noninstitutional adult civilian population that is employed

question

business cycle

answer

recurrent swings(up and down) in real GDP

question

recession

answer

a slowdown in the economy marked by real GDP falling for two consecutive quarters

question

absolute real economic growth

answer

an increase in real GDP from one period to the next

question

per capita real economic growth

answer

an increase from one period to the next in per capita real GDP, which is real GDP divided by population

question

human capital

answer

the knowledge and skill that people use in the production of goods and services

question

fiscal policy

answer

Changes government makes in spending or taxation to achieve particular economic goals

question

expansionary fiscal policy

answer

An increase in government spending or a reduction in taxes

question

contractionary fiscal policy

answer

A decrease in government spending or an increase in taxes

question

crowding out

answer

The situation in which increases in government spending leads to reductions in private spending.

question

crowding in

answer

the situation in which decreases in government spending lead to increases in private spending

question

after-tax income

answer

the part of income that's left over after taxes are paid

question

Laffer curve

answer

question

monetary policy

answer

changes the Fed makes in the money supply

question

expansionary monetary policy

answer

an increase in the money supply

question

contractionary monetary policy

answer

a decrease in the money supply

question

stagflation

answer

The occurrence of inflation and high unemployment at the same time

question

stop-and-go,on-and-off monetary policy

answer

an erratic monetary policy

question

proportional income tax

answer

An income tax that everyone pays at the same rate, whatever the income level

question

progressive income tax

answer

An income tax whose rate increases as income level rises. Progressive income tax structures are usually capped at some rate.

question

regressive income tax

answer

an income tax whose rate decreases as income level rises

question

national debt

answer

the sum total of what the federal government owes its creditors

question

budget deficit

answer

the situation in which federal government expenditures are greater than federal government tax revenues

question

budget surplus

answer

situation in which federal government expenditures are less than federal government tax revenues

question

exports

answer

goods produced in the domestic country and sold to residents of a foreign contry

question

imports

answer

goods produced in foreign countries and purchased by residents of the domestic country

question

balance of trade

answer

the difference between the value of a country's exports and the value of its imports

question

absolute advantage

answer

the situation in which a country can produce more of a good than another country can produce with the same quantity of resources

question

specialize

answer

To do only one thing. For example, when a country specializes in the production of a good, it produces only that good.

question

comparative advantage

answer

the situation in which a country can produce a good at lower opportunity cost than another country

question

outsourcing

answer

the term used to describe work done for a company by another company or by people other than the original company's employees

question

tariff

answer

tax on imports

question

dumping

answer

the sale of goods abroad at prices below their costs and below the price charged in the domestic markets

question

exchange rate

answer

the price of one nation's currency in terms of another nation's currency

question

flexible exchange rate

answer

the system whereby currency exchange rates are determined by the forces of supply and demand

question

fixed exchange rate system

answer

The system whereby currency exchange rates are fixed, or pegged, by countries' governments.

question

depriciation

answer

a decrease in the value of one currency relative to other currencies

question

appreciation

answer

an increase in the value of one currency relative to other countries

question

developed country

answer

a country with a highly per capita GDP

question

less-developed country

answer

a country with a relatively low per capita GDP

question

population growth rate

answer

the birthrate minus the death rate

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