Review Flashcards
What do we base GDP off of?
Production
What is the appropriate policy to end a recession
Fiscal policy by reducing taxes
Reducing Taxes- This will increase the buying power.
Increase Taxes?- This will help increase government spending.
Increase government spending
As a government increases spending to move the aggregate supply curve to the right it is called what?
Expansionary fiscal Policy
As a government Decreases spending to move the aggregate supply curve to the left it is called what?
Contraction Fiscal Policy
If I follow an economic principle and I am governing a country what is the biggest benefit to me?
You have auto stabilizers that will help.
If the government takes their spending and increases it then what happens to the fixed tax rate line?
WE would have an increased amount of tax.
What is a deficit?
When we are spending more than we are making.
What if the interest rates are raised? what happens to the monetary supply?
It decreases it.
what is the crowding out effect?
If you have to pay at a very high interest rate than you have to work harder with that money to make money to make it a profitable Deal. If interest rate goes up than it will effect investment spending.
What is public Debt?
What represents government debt?
T-bills(<1year) and T-bonds(25 years).
Treasury Notes. These are coming from the feds and the treasury.
Who does the U.S. owe the most to?
We owe the most to ourselves.
If you see an increase in GDP than what does that do to the demand of money?
Increases.
If you are asked about the transaction asset or demand for money than?
Transaction-How much money needs to be in the economy
Asset-
Interest Rate-
Money Supply- No matter what the scenario is the money supply is the biggest way to determine the equilibrium point
If I am a commercial bank and borrow money from the fed reserve what does it do to my money?
It increases my lending power.
The rule of 3? The multiplier of 3?
A L+OE
Res 60 Dep 200
Sec 80 5
Loans 30
