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24 Cards in this Set
- Front
- Back
the total value of all final goods and services produced in a particular economy
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GDP
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gross domestic product measured in current prices
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Nominal GDP
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gross domestic product expressed in constant or unchanging, prices
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Real GDP
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How do fears of future economic problems affect GDP?
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consumers will spend less and save money in case of future economic problems, GDP will be reduced.
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What is the 4 phases of the business cycle?
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Peak, recession, trough, and recovery
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the amount of goods and services in the economy that will be purchases at all possible price levels
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aggregate demand
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the total amount of goods and services in the economy available at all possible prices level.
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aggregate supply
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Things that could shift AD
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a change in consumption, investment, government spending and net exports
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Things that could shift AS
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change in availability of resources, cost of resources, technology and productivity, and taxes/subsidies.
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demanding for goods and services exceed existing supplies.
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demand - pull inflation
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decline in RGDP combined with a rise in the price level
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stagflation
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Who is responsible for putting together the federal budget
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president and congress
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When to use expansionary fiscal policy?
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during recession
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when to use contractionary?
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during inflation
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Options for expansionary
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1) increase gov. spending
2) reduce taxes |
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options for contractionary
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1) decrease gov. spending
2) increase taxes |
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a situation in which the gov. spends more than it takes in
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budget deficit
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a situation in which the gov. takes in more than it spends
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budget surplus
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a school of economics that believes tax cuts can help an economy by raising supply
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supply side economics
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the actions the federal reserve takes to influence the level of real GDP and the rate of inflation in the economy
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monetary policy
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monetary policy that increase the money supply, fed uses it during contraction-declining income
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Easy money policy
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monetary policy that reduces the money supply, fed uses it during a rapid inflation that may causes high inflation
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tight money policy
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tell us how much the money supply will increase after an initial cash deposit to the banking system
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money multiplier
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banking system that keeps only a fraction of funds on hand and lends out the remainder
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fractional reserve banking
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