Macro Final Part 1

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  1. Model of aggregate demand and aggregate supply
    the model that most economists use to explain short-run fluctuations in economic activity around its long-run trend
  2. Aggregate-demand curve
    a curve that shows the quantity of goods and services taht households, firms, the government, and customers abroad want to buy at each price level
  3. aggregate-supply curve
    a curve that shows the quantity of goods and services taht firms choose to produce and sell at each price level
  4. Natural rate of output
    the production of goods and services that an economy achieves in the long run when unemployment is at its normal rate
  5. stagflation
    a period of falling output and rising prices
  6. medium of exchange
    an item that buyers give to sellers when they want to purchase goods and services
  7. unit of account
    the yardstick people use to post prices and record debts
  8. store of value
    an item that people can use to transfer purchasing power from the present to the future
  9. liquidity
    the ease with which an asset can be converted into the economy's medium of exchange
  10. commodity money
    money that takes the form of a commodity with intrinsic value
  11. money
    the set of assets in an economy that people regularly use to buy goods and services from other people
  12. fiat money
    money without intrinsic value that is used as money because of government decree
  13. currency
    the paper bills and coins in the hands of the public
  14. deman deposits
    balances in bank accounts that depositors can access on demand by writing a check
  15. federal reserve (Fed)
    the central bank of the United States
  16. central bank
    an instituion designed to oversee the banking system and regulate the quantity of moeny in the economy
  17. money supply
    the quantity of money available in the economy
  18. monetary policy
    the setting of the money supply by policymakers in the central bank
  19. reserves
    deposists that banks have received but have not loanded out
  20. fractional-reserve banking
    a banking system in which banks hold only a fraction of deposits as reserves
  21. reserve ratio
    the fraction of deposits that banks hold as reserves
  22. money multiplier
    the amount of moeny that banking system generates with each dollar of reserves
  23. bank capital
    the resources a bank's owners have put into the institution
  24. leverage
    the use of borrowed money to supplement existing funds for purposes of investment
  25. leverage ratio
    the ratio of assets to bank capital
  26. capital requirement
    a government regulation specifying a minimum amount of bank capital
  27. open-market operations
    the purchase and sale of U.S. governmentbonds by the Fed
  28. discount rate
    the interest rate of the loans that the Fed makes to banks
  29. reserve requirements
    regulations on the minimum amount of resrves that banks must hold against deposits
  30. federal funds rate
    the interest rate at which banks make overnight loans to one another
  31. quantity theory of money
    a theory asserting that the quantity of money available determines the price level and that the growth rate in the quantity of money available determines the inflation rate
  32. nominal variables
    variables measured in monetary units
  33. real variables
    variables measured in physical units
  34. classical dichotomy
    the theoretical separation of nominal and real variables
  35. monetary neutrality
    the proposition that changes in the money supply do not affect real variable
  36. Velocity of money
    the rate at which money changes hands
  37. quantity equation
    the equation M x Y = P x Y, which relates the quantity of money, the velocity of money, and the dollar value of the economy's output of goods and services
  38. inflation tax
    the revenue the government raises by creating money
  39. Fisher effect
    the one-for-one adjustment of teh nominal interest rate to the inflation rate
  40. shoeleather costs
    the resources wasted when infaltion encourages people to reduce their money holdings
  41. menu costs
    the costs of changing prices
  42. exports
    goods and services that are produced domestically and sold abroad
  43. imports
    goods and services that are produced abroad and sold domestically
  44. net exports
    the value of nation's exports minus the value of its imports; also called the trade balance
  45. trade balance
    the value of a nation's exports minus the value of its imports; also called net exports
  46. trade surplus
    an excess of exports over imports
  47. trade deficit
    an excess of imports over exports
  48. balanced trade
    a situation in which exports equal imports
  49. net capital outflow
    the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners
  50. nominal exchange rate
    the rate at which a person can trade the currency of one country for the currency of another
  51. appreciation
    an increase in the value of a currency as measured by the amount of foreign currency it can buy
  52. depreciation
    a decrease in the value of a currency as measured by the amount of foreign currency it can buy
  53. real exchange rate
    the rate at which a person can trade the goods and services of one country for the goods and services of another
  54. purchasing-power parity
    a theory of exchange rates whereby a unit of any given currency should be able to buy the same quantity of goods in all countries
  55. trade policy
    a government policy that directly influences the quantity of goods and services that a country imports or exports
  56. capital flight
    a large and sudden reduction in the deman for assets located in a country

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Macro Final Part 1
2012-12-13 00:46:10
Marcro Economics final book

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