Download Economics 101: Understanding Money, Fiscal Policy, and Monetary Policy and more Quizzes Economics in PDF only on Docsity!
TERM 1
G,T,Yd
DEFINITION 1 G= government purchases of goods and services T= Net Taxes Yd= Disposable income TERM 2
Fiscal policy- multipliers
DEFINITION 2 Changes to G or T Expansionary: G increases and/or T decreases Contractionary: G decreases and/or T increases The autonomous spending multplier can be used to relate a change in G to the resulting change in Y TERM 3
Interest Rates
DEFINITION 3 are determined by the interation of supply and demand for money. TERM 4
Money Supply
DEFINITION 4 amount of assets incirculationthat can be used in the form of money. TERM 5
Money Demand
DEFINITION 5 amount of wealth people want to hold in form of money.
TERM 6
Functions of Money
DEFINITION 6
- Store of Value 2. Unit of account 3. Medium of exchange TERM 7
Types of Money
DEFINITION 7
- Commodity Money- has intrinsic 2. Fiat (token) Money- has little intrinsic TERM 8
Measuring the money supply
DEFINITION 8 M1= currency held outside oof bonds + demand deposits + traveler's checks + other Checkable deposits M2= M1 + money market accounts + small-time deposits TERM 9
Federal Reserve System
DEFINITION 9 central bank conrtol the money supplyand interest rates regulates the banking system Chairman: Ben Bernance TERM 10
Three tools of monetary
policy
DEFINITION 10 1.Required Reserve Ratio- proportion of customer deposits banks are required to keep reserves. 2. Discount rate- rate charged to banks borrowing directly from the feds. 3. Open Market Operations- The trading desk at the NY fed buys/ sells outstanding treasury Bonds from /to the public to change the money supply most commonly used monetray policy tool.
