Aggregate expenditures model- GDP = C + Ig + G +Xn
Aggregate Supply&Demand- A schedule or curve showing the total quantity of goods&services supplied at different price levels.
Fiscal Policy- Changes is government spending&tax collections designed to achieve a full-employment&noninflationary domestic output.
Name of our currency&who creates it? M1 coins issued by US Treasury, paper issued by Federal Reserve System
M1&M2 levels of money. What’s counted? What don’t we count?
Determinants of aggregate demand&effects?Change in consumer spending, investment spending, gov’t spending, net export spending
Determinants of aggregate supply&effects? Change in productivity, change in input prices, change in legal institutional environment
Contractionary fiscal policy- A decrease in gov purchases of goods and services, increase in net taxes, or combo of both, to decrease aggregate demand&control inflation.
Expansionary fiscal policy. What tools do we have&how do we use them? Gov spending increases, taxes are at the option of the US fed gov designed to increase aggregate demand&therefore raise real GDP.
Built in stabilizers&it’s advantages? Anything that increases the gov’t budget deficit or reduces its budget surplus during a recession that increases or reduces its budget surplus during an expansion without requiring explicit action by policymakers
The multiplier&changes in spending&economy? An upward shift of the aggregate exp schedule will increase the equilibrium gdp
3 functions of money- a medium of exchange, store of value, unit of account
Political business cycle&how it impacts the economy? Swings in overall economic activity&real GDP resulting from election-motivated fiscal policy, rather than from inherent instability in the private sector.
Equilibrium aggregate demand- the total demand for final goods and services in the economy at a given time and price
3 branches of federal reserve-board of governors, 12 reserved banks, fed open market committee
How do people get appointed? Board of governors – chairperson apt by president; 12 reserved banks – board selected by bank, banks owned by the banks within the district; fomc
Terms of office&responsibilty-bod – 7