Econ Final Review Pt.1 – Flashcards
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A bank's lending power is based on
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Excess reserves
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A tight money policy
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Restricts the growth of money supply
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Some people believe that a weak economy will result in
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A higher crime rate
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According to the demand-pull theory, inflation is caused by
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Businesses
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Economic growth benefits the government by
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Reducing budget surpluses
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This is a proposed market based anti poverty program designed to encourage work and reduce administrative costs
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Negative income tax
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Low interest rates
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Increase consumer borrowing
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The immediate affect of inflation is the
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Decline in purchasing power of the dollar
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High prices that cause employees to ask for raises, causing producers raise prices describes the
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Wage-price spiral
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The Lorenz curve is used to demonstrate
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The degree of income inequality
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When the Fed refers to M1, it is referring to such elements of the money supply as
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Traveler's checks and currency
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An index that reports on price changes for about 90,000 goods and services is the
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Consumer price index
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A general decline in the level of prices is called
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Deflation
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A car assembled at an American plant in Canada is
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Excluded from GDP
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The purpose of the market basket is to
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Keep track of prices of consumer items
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Unlike demand-side economics, supply-side economics
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Advocates reduced government involvement in business
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The availability of money and the cost of credit are decided by the
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Federal Open Market Committee
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The sale of a used car is not counted in GDP because
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No new wealth is created
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The largest sector of the macroeconomy is the
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Consumer sector
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Liquidity refers to
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Bonds and other investments that can easily be converted to cash
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Unemployment that is directly related to swings in the business cycle is
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Cyclical unemployment
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An easy money policy
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Allows the money supply to grow
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This marked the beginning of the Great Depression in 1929
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Stock market crash
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The federal reserve system is
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The nation's central bank
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Unlike many policies, the Fed
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Is concerned about the long-run health of the economy
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Aggregate demand will increase
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If consumers save less and spend more
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The Fed's Federal Open Market Committee
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Is the Fed's primary monetary policy making body
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To increase the money supply The Federal Reserve System
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Buys government bonds on the open market
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The federal reserve
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Is made up of 12 district banks and 25 branch banks
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Since the colonial period, the census had revealed
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A trend toward smaller households
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The federal reserve system
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Regulates margin requirements for the stock market
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The foreign sector of the economy represents the
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Difference between the dollar value of exports and imports
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When a shoe manufacturer buys a shipment of leather to make shoes, the leather is considered to be
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An intermediate product
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Changes in technology and changes in consumer tastes can cause
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Structural unemployment
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To make a profit, a bank must
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Charge more for the loans it makes than it pays on deposits
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Deregulation is most closely associated with
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Supply-side economics
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To monetize the debt incurred by deficit spending during the Vietnam War, the money supply was
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Increased to keep interest rates stable
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The prime rate refers to the
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Lowest interest rate commercial banks may charge their customers
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A comprehensive measure of consumer discomfort during a period of rising inflation and high unemployment is the
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Misery index
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In the short run, an increase in the money supply results in
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Lower interest rates
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A bank statement of assets and liabilities is a
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Balance sheet
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The census is taken every
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10 years
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To determine Gross National Product,
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Add to GDP all payments received by Americans outside the U.S. and subtract payments made to foreign-owned resources in the US
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The business cycle since WWII has been characterized by
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Extended expansions alternating with brief recessions
