Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

AP Macro-Economics > 10 Macro Last Min. Notes > Flashcards

10 Macro Last Min. Notes Flashcards

1
Q

Who controls Monetary Policy

A

The fed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What does Monetary Policy change

A
  1. Res. Req.
  2. Fed. Funds/Discount Rate
  3. Open Market Ops
  4. Interest Rates
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Monetary Policy impact on graph

A

LFM: Supply
MM: Supply

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Monetary Policy impact on AD

A

C, Ig, Xn

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Monetary Policy side effects

A

none

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Who controls Fiscal Policy

A

Congress

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What does Fiscal Policy change

A

G spending

Personal income tax

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Fiscal Policy impact on AD

A

C, G

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Fiscal Policy side effects

A

crowding out

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Explain crowding out

A
  1. Demand in LFM +
  2. Supply in LFM —
  3. Interest rate +
  4. Ig –
  5. AD –
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Types of Non-Discretionary

A

“Automatic”
Progressive Tax system
Transfer Payments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Que es Progressive Tax system

A

Reduce Tax in Recession

Increase in D-P

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Que son Transfer Payments

A

Welfare

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Side effects of Non-Discretionary

A

G deficit in recession

G surplus in D-P

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Regressive Tax system

A

poorest pay highest %

  • Sales tax
  • Consumption tax
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Proportional Tax system

A

Equal everyone

- Soc. Sec.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Staglflation

A

Reaganomics

  • Shift SRAS to right
  • Decr. PUP/Biz. Tax
  • Trickle down (decr. tax on rich)
  • Laffer curve
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

work, save and invest

A

Reaganomics

  • Laffer curve
  • Cutting tax will increase incentive to work!
  • Decrease tax
  • Since working, more $$ in bank
  • Supply +, Int. rate +
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Less tax rev. due to a progressive tax system is what kind of tax

A
  • non-discr.
  • expansionary
  • counter-cyclical
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Equilibrium Int. Rate Inctr. in LFM what effects to Ig

A

Only move up on demand of Inv. Demand graph. Quantity decreases (Crowding out)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Tariff

A

tax on imports

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Quota

A

how much can enter

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Embargo

A

ban

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

When ¥ strengthens compared to $, good wise…

A

J ppl can buy more A stuff

  • Imports +, Exports –
  • Xn –
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Interest Rates and International: think…

A

BONDS

ppl want BONDS with higher interest rates

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Relationship b/w Xn and IR

A

inverse

  • If other countries are doing well, they want your stuff
  • Want prosperous trade partners
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

What changes PL

A

G spending incr, +
World-wide craze for domestic good (Xn+)
Domestic optimism + (C, Ig +)
Interest rates +, PL –

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Why does Biz Tax + PL effect not be determined

A

SRAS go Left
AD go left
Both graphs shift but cannot determine how much

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

For ∆ PL to be most effective for ∆GDP,

A

SRAS flat part

super bad economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Steeper AS curve, greater or weaker expansionary effect?

A

weaker

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Printing $$s can…

A
  • amplify expansionary effect of budget deficit

- neutralize crowding out

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Reserve Requirement

A

%

ment-percent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Jobs of The Fed

A 
Issuing currency
Setting RR and holding Reserves
Lending to Banks
Clearing Checks
Acting as Fiscal Agent
Supervising Banks
Controlling $ supply (Monetary Policy)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Monetary Policy Expansionary

A

RR
Fed. Funds/Discount Rate
OMO
Moral Succession

down down buy the water

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Monetary Policy Contractionary

A

RR
Fed. Funds/Discount Rate
OMO
Moral Succession

up up sell tight

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Fed. spending $ creation go into what?

A

LFM

G incr, # of LFM +

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

M1

A

Currency
Demand deposit
Debit card (not credit card)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

M2

A

M1 + Total supply of $$ in country
What they usually have in Money Market graph
saving accounts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

M3

A

M2 + larger CDs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

What are not $$

A 
credit cards ( a loan)
Resources
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

Advantages of Monetary Policy

A

Faster
Not as political
No crowding out effect (∆ in interest rates are intended)

42
Q

Effective interest rate= Yield=

A

Coupon amount/Price paid

43
Q

When stock market is going well, want to sell or buy bonds?

A

sell to get cash

44
Q

When demand for bonds increases, what happens to yield?

A

bonds +
Prices +
Yield –

45
Q

Money Market graph Demand shift Right

A

When GDP +, ppl want more stuff

When PL+, need more $ to buy

46
Q

Monetary Policy is most effective when..

A

Demand for LF is steep

Ig is flat

47
Q

What shifts the supply in Money Market

A

The Fed through lending habits of banks

48
Q

Velocity of $ means?

A

Average # of times each dollar is spend on final goods and services in a year

49
Q 
Income:
Land
Capital
Labor 
Entrepreneurial Ability
A

Rent
Interest
Wages
Profit

50
Q

Command economy AKA

A

Communism

51
Q

Normative Economics

A

Analyze data

Opinion

52
Q

Positive Economics

A

Just gather data

facts

53
Q

Accounting cost (explicit)

A

material labor energy

54
Q

Economic cost (implicit)

A

.opportunity cost

55
Q

LFM graph is keeping it real with what

A

Inv Demand graph

56
Q

Effects on Exchange $ markets with PL + in Japan

A

Demand of USD +

57
Q

Credit

A

$ entering country

58
Q

Debit

A

$ leaving country

59
Q

Current account

A

Records imports/exports of goods and services
Exports - inpayments- credit
Import - outpayments- debit

60
Q

Financial account

A 
Flow of $ sale/purchase of 
Realestate
Capital
Financial capital
Foreign financial capital
61
Q

Balance of Payment Surplus

“ Deficit

A

Net result of the Current AND Financial accounts

62
Q

Official Reserves Account

A

Balances out discrepancies between Current account and Financial account

63
Q

Product Market

A

Demander: households
Supplier: biz

64
Q

Resource Market

A

Demander: biz
Supplier: household

65
Q

Injections

A

Investment
Government spending
Exports

66
Q

Leakage

A

Savings
Taxes
Imports

67
Q

Gross Investment (Ig)

A

Total spending on capital goods (by biz)

68
Q

Net Investment (In)

A

Total net additions to the stock of capital goods

69
Q

Net investment =

A

Gross investment- Capital Consumption Allwance

70
Q

Capital consumption allowance

A

The amount of money a country has to spend each year to maintain its present level of economic production.

71
Q

Inventory

A

Goods produced but not yet sold

∆inventory is counted in gdp

72
Q

Not counted in GDP

A 
Housewife work
Intermediate Trans
Public Transfer Payments
(welfare)
Private Transfer
(donation)
Security Transaction
(stocks and bonds)
73
Q

Negative Net investment means

A

Depreciation> gross Investment

Stock of cpaital is going down

74
Q

Find Nominal GDP Expenditures method

A

C + Ig + Xn + G

75
Q

Find Nominal GDP Income method

A

wages + rent + interest + profit + ind. biz tax + CCA

76
Q

Okun’s Law

A

For every 1% that actual unemployment exceeds hte Natural, a 2% loss of GDP is generated

77
Q

Who does unexpected high inflation hurt?

A

fixed income ppl

Retired people

78
Q

Who does unexpected high inflation benefit?

A 
Fixed expenditures (rent)
Fixed inflation rate (loan)
79
Q

Who does variable interest loan protect?

A

creditor (lender)

80
Q

Rule of 70

A

70/% annual change= # of years to double

81
Q

COLA

A

Cost of Living Adjustment
Protection against inflation

If J got $1000 last year and COLA was 4%, he’ll get $1040

82
Q

Classical Economies

A

Smith

Say’s Law

83
Q

Say’s Law

A

Classical economies
Supply creates its own demand
wage flexibility is important

84
Q

Keynesian Economies

A 
John Mayred Keys
More G involvement to stabilize economy
Believe Recessions are caused by excessive savings (which decreases AD)
Prevent slumps through AD control 
Focus on short-term
85
Q

Rational Expectation Theory (think w graph)

A

People are smart and aware
G should keep out
People will ask for raises when they see PL +
AS - (cuz PUP +)
AD + (cuz C +)
Therefore PL increases but GDP stays the same

86
Q

Adaptive Expectation Theory (think w graph)

A

Adapt expectations on past ONLY

Ignore G’s plans always on past

87
Q

If AET is true.. Expansionary will…
GDP
Wages
SRAS

A

GDP +
Wages +
SRAS –

88
Q 
If RET is true.. Expansionary will...
GDP
PL
Wages
SRAS
A

GDP no ∆
PL +
Wages +
SRAS –

89
Q

Crowding out effect deficit can be avoided by

A

printing $$

90
Q

Budget deficit has greatest expansionary effect when…

A

financed by newly printed $

91
Q

When G purchases bonds, the $ the bank attained is…

A

all excess reserves

92
Q

If the Fed sells Bonds on OMO
Supply of LF
Interest rate

A

LF: Increase

Interest rate: decrease

93
Q

PPC curves assum

A

All resources and technology: fixed

All resources : fully-employed.

94
Q

Disinflation

A

When an economy experiences a lower inflation than the last year

95
Q

Largest component of expenditure

A

Consumption

96
Q 
Improved schools will affect
AS
AD
Real GDP
PL
A

AS +
AD+
Real GDP +
PL CBD

97
Q

A Government program increases the incentive for banks to lend more money.

A 
# of LF +  ---> RIR -- ---> Ig+ --> AD
PUP is not affected. Therefore AS constant
GDP and PL +
98
Q

What would decrease investment demand

A

cost

99
Q

Better technology

A

Aggregate Supply +

Aggregate Demand +

Real GDP +
PL:l can not be determined.

100
Q

If a country runs a deficit, mostlikely will fund with

A

selling G bonds

AP Macro-Economics (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions