Economics Flashcards
1
Q
Multiplier effect
A
1/reserve rate
2
Q
Money multiplier
A
(1+% of deposits) / (1+reserve requirement)
3
Q
Quantity theory of money
A
Increase in money supply leads to proportional increase in prices.
4
Q
Philips curve
A
inverse relationship between unexpected inflation and unemployment.
5
Q
Laffer curve
A
Relationship between increasing tax rates and revenue.
6
Q
Crowd out effect
A
Deficits require governments to borrow madd compete for funds. Increasing real rates and hurting growth.
