Brainscape's Knowledge GenomeTM

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


See full index

ECON 104 > Final > Flashcards

Final Flashcards

1
Q

Bater

A

Trading goods for goods
requires “coincidence of double wants”

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

Commodity Money

A

has an intrinsic use
shells, wheat, precious metals

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

fiat money

A

has no intrinsic value, paper money

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

functions of money

A
  1. medium of exchange
  2. unit account
  3. store of value
  4. standard of deferred payment (pay over time)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

M1 =

A

currency, checking accounts, savings accounts

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

M2 =

A

M1 + bank CD’s, time-deposits, money market mutual funds

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

banks creating money

A

When banks take deposits in, they loan out much of that money to borrowers. Borrowers spend, and the money gets deposited elsewhere, increases money supply

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

reserves

A

money bank has on hand or at federal reserve

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

deposit multiplier =

A

1 / reserve ratio

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

Creation of federal reserve, bank runs

A

Fed was designed as a “bank for banks”
The lender of last resort
Goal is to prevent bank panics

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

discount loans and discount rate

A

Relevant when banks borrow directly from the fed, and the discount rate is the interest rate banks would pay for this borrowing

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

monetary policy tools

A

old and new tools, before and after 2008

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

Quantity of theory of money

A

M x V = P x Y

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

Inflation and money supply

A

Derives that there is a directly relationship between M and P (inflation)

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

Monetary policy

A

Actions taken by the federal reserve
Fed = our central bank

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

Two monetary policy targets

A

Money supply
Interest rates

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

Interest rates

A

FFR (federal funds rate)
Rate at which banks can borrow from each other

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Four goals, dual mandate of the Fed

A

Price stability
Full employment
Stability of financial markets
Economic growth

19
Q

two most important (dual mandate)

A

Price stability
Full employment

20
Q

Monetary policy tools (old)

A

O.M.O (open market operations), discount policy, reserve requirements

21
Q

Monetary policy tools (new)

A

interest on reserves, reverse repurchase agreements, FFR is just a chosen administered rate

22
Q

Money demand

A

Graph on phone
Interest = price of money

23
Q

Federal funds rate

A

Interest rate when banks borrow from each other

24
Q

Discount rate

A

Interest rate when banks borrow directly from Fed

25
Q

As interest rates go up, AD goes down

A

Interest rates up, consumer, net exports, and investment decrease, AD shift left (decrease)

26
Q

As interest rates go down, AD goes up

A

Interest rates down, consumer, net exports, and investment increase, AD shift right (increase)

27
Q

Expansionary monetary policy

A

Producing interest rates to get AD up, done to increase output, GDP, get out of recession

28
Q

Contractionary monetary policy

A

Interest rates increase to get AD to decrease, done to fight inflation because left AD shift result in lower equilibrium price levels

29
Q

Data lags

A

Policy can be tough to “time” property, due to data delays
Good forecasting is necessary

30
Q

Inflation targeting

A

2% target

31
Q

Fiscal policy

A

Done by president and congress
Changes in Government Purchases or Taxes

32
Q

Automatic stabilizers

A

Unemployment insurance and progressive income taxes

33
Q

Federal expenditures

A

Includes purchases, also + transfer payments like social security

34
Q

purchases include

A

the G

35
Q

Government revenue sources

A

Taxes, income tax, payroll taxes, corporate taxes, tariffs and fees

36
Q

Problems with social security and medicare

A

Becoming unsustainable
Few paying in many taking money out

37
Q

Expansionary fiscal policy

A

G increase or T decrease to get AD increase
T decrease (consumer increase or investment increase)
Creates government budget deficit

38
Q

Contractionary fiscal policy

A

G decrease or T increase
Rarely done for purposes of fighting inflation
Mainly done for budget considerations

39
Q

Government purchases multiplier =

A

change in equilibrium GDP / change in G > 0

40
Q

Tax multiplier =

A

change in equilibrium GDP / change in T < 0

41
Q

Crowding out in short run

A

G increase and investment decrease
In long run, we have more debt, and G is a larger % of GDP

42
Q

Costs of government spending

A

In long run, we have more debt

43
Q

tax wedge

A

Difference between pre-tax and post-tax wage

44
Q
A

ECON 104 (12 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions