Flashcards

Question 1

Ad=Cignx

Answer 1

C-consumption by households
I-investment spending by business
G- gov purchases of goods and services
No- net exports to foreign countries

Question 2

Statement of federal government,tons expenditures and revenues for upcoming year

Answer 2

Federal budget

Question 3

Close recessionary gap stimulate economy decreases unemployment

Answer 3

Expansionary policy

Question 4

Close inflationary gap restrain economy decreases inflation rate

Answer 4

Contractionary fiscal policy

Question 5

3 functions of money

Answer 5

1. Mediu, of exchange-accepted means of payment
2. Standard of value- unit of expressing price
3. Store of value- accumulation wealth for future

Question 6

3 issues related to fiscal policy

Answer 6

1. Crowding out -gov borrows money and competes with private businesses
2. Expansionary bias- people don’t like High taxes
3. Time lags - the time between policies

Question 7

3 gov. Expenditures

Answer 7

1. Transfer payments
2. Purchases of goods/services
3. Debt interest

Question 8

Spending>revenue

Answer 8

Debt

Question 9

See important role for government. I’m economy’s performance

Answer 9

Activist economist

Question 10

Have faith in economy’s ability to heal itself

Answer 10

Non activist economist. Laissez fair

Question 11

Accumulated borrowings of the federal government,t

Answer 11

Public debt

Question 12

Anything of value owned by individual business

Answer 12

Asset

Question 13

Checking deposits the bank promises to pay at once on demand

Answer 13

Demand deposits

Question 14

Interest bearing deposits

Answer 14

Savings

Question 15

M-1

Answer 15

Currency: coins/paper money+ demand and check able deposits
Largest component is check able deposits

Question 16

How quickly something can be changed to cash

Answer 16

Liquidity

Question 17

Debts the business owes

Answer 17

Liabilities

Question 18

Cash in banks vault plus on deposit with Feds

Answer 18

Bank reserves

Question 19

Excess reserves

Answer 19

Total reserves-requires reserves

Question 20

Government agency responsible for controlling the national money supply

Answer 20

Federal reserve system

Question 21

Functions of the federal reserve

Answer 21

1. Controls money supply
2. Makes loans to banks/institutions
   3 provides check collection service

Question 22

Influences total spending- fighting unemployment or inflation

Answer 22

Monetary policy

Question 23

3 policy tools to control money supply

Answer 23

1 open market operations- buy and sell gov. Securities
2. Ability to alter reserve requirements at banks
3. Control over discount rate-interest rate for banks

Question 24

Interest rate

Answer 24

Higher rate. The less money demanded

Question 25

Government uses tax and spending powers to fight unemployment and inflation

Answer 25

Fiscal policy