Macro Csv.csv - Sheet1 Flashcards
To increase the money mulitiplier the fed can
lower the intrest rate on paid reserves
If the federal reserve wishes to increase the money supply, it should
decrease the discount rate
When the demand for money parameter, k, is large, the velocity of money is ______ and money is changing hands _____.
small; infrequently
The oppourntity cost of holding money is the
nominal intrest rate
One possible benefit of monderate inflation is
better funtioning labor markets
Most economists believe that prices are
flixible in the long run but many are sticky in the short run
According to the quanity theory of money, if output is higher, ____ real balances are required, and for fixed M this means ____ P.
higher; lower
In the Keynesian -cross model, actual expenditures differ from planned expenditures by the amount of
unplanned inventory investment
The government-purchases multiplier indicates how much ___ change(s) in response to a $1 change in government purchases.
income
In the keynsian-cross model with a given MPC, the government-expenditure mulitplier ___ the tax mulitplier
is larger than
An IS curve shows combinations of
intrest rates and income tht bring equilibrium in the market for goods and services
In the IS-LM model, changes in taxes initally affect planned expenditures through:
consumption
An increase in the monery supply shirfts the ___ curve to the right, and the aggregate demand curve ___.
LM; shifts to the right
Sticky prices
in the short run, some wages and prices are sticky. For studying year to year fluctiations, most macroeconomists believe that price stickyness is a better assumption than price flexibility, magazine publishers tend to change their newsstand prices only every three or four years
Okun’s Law is the ____ relationship between real gdp and the ____.
Negative; unemployment rate
According to Snowdon and Vane, the keynsian schools of thought are united in the belief that
makets fail sometimes, causing aggreagate economic instability and requiring government intervention.
In the relationship expressed in functional form, Y=G(K,L), Y stands for real GDP, K stands for the amount of captial in the economy, and L stnads for the amount of lanor in the economy. In this case G():
is the function telling how the variables in the parentheses determine real GDP.
All of the following are measures of GDP :
total of income form all production in the economy, expenditures on all final goods and services produced, value of all final production
The production function feature called “constant returns to scale” means that if we:
increase in captial and labor by 10% each, we increase output by 10%
When facotr supply is fixed and quanity of the factor is graphed on the horizontal axis while factor price is graphed on the vertical axis, the factor:
supply curve is vertical.
Chain-weighted measures of real GDP make use of prices from
a continously changing base year
In the solow growth model the savings rate determines the allocation of output between:
investment and consumption
In the solow growth model if investment exceeds depreication, the captial stock will ____ and output will ____ until the steady state is attained.
increase; increase
A higher rate of savings leads to a
larger captial stock and a higher level of output in the long run
IN the solow model, conditional convergence occurs when economies converge to
their own, individual steady states
Endogeneous growth theory rejects the assumption of exogenous
technological change
Decreasing marginal returns to an input
one of the inputs is fixed and vary the inputs increase by one additional input, output will decrease at a marginal rate.
Decreaseing returns to scale
Scale up all of the inputs by the same factor ( mulitply) and see what happens to output.If an output was doubled then its constant returns to scale, if the output was below double then it is decreasing returns to scale
