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An introduction to key economic concepts, including government purchases, fiscal policy multipliers, interest rates, money supply, money demand, functions and types of money, measuring the money supply, and the tools of monetary policy. Learn about the roles of the federal reserve system and its impact on the economy.
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TERM 1
DEFINITION 1 G= government purchases of goods and services T= Net Taxes Yd= Disposable income TERM 2
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
DEFINITION 3 are determined by the interation of supply and demand for money. TERM 4
DEFINITION 4 amount of assets incirculationthat can be used in the form of money. TERM 5
DEFINITION 5 amount of wealth people want to hold in form of money.
TERM 6
DEFINITION 6
DEFINITION 7
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
DEFINITION 9 central bank conrtol the money supplyand interest rates regulates the banking system Chairman: Ben Bernance TERM 10
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.