Macroeconomics Exam - Fall 2024

A sudden and unexpected change in the demand for goods and services in an economy.

A decrease in the demand for goods and services, leading to a decrease in economic activity.

Factors that can cause demand shocks include changes in consumer confidence, government policies, and global events.

A rise in the cost of raw materials, labor, or other resources used to produce goods and services.

A reduction in the amount of taxes that US households and businesses pay.

A lower cost of borrowing money. This can encourage investment and spending.

An increase in the value of assets owned by households and businesses, like stocks, bonds, or real estate.

A decline in the optimism and willingness of businesses to invest and expand.

The total amount of money spent by households on goods and services.

The income households have left after paying taxes and adjusting for inflation.

The value of assets owned by households, adjusted for inflation.

Negative beliefs about the future economy, leading to reduced spending.

A measure of how optimistic consumers feel about the economy.

The cost of borrowing money. Higher rates discourage borrowing and spending.

The central bank of the United States, responsible for managing the money supply and interest rates.

The interest rate charged on short-term loans between banks. It's a key indicator of monetary policy.

The amount of money households and businesses want to hold, influenced by factors like interest rates and economic activity.

The interest rate at which the Federal Reserve lends money to banks.

The interest rate at which banks lend reserves to each other overnight.

The buying and selling of government bonds by the Federal Reserve to control the money supply.

The percentage of customer deposits that banks must keep on hand as required reserves.

The ratio of the change in real GDP to the initial change in spending that caused it.

An economic theory that focuses on the role of aggregate demand in determining the level of economic output and employment.

The level of real GDP where aggregate demand equals aggregate supply.

The fraction of each additional dollar of disposable income that households spend on consumption.

The income households have left after paying taxes.

The total demand for goods and services in an economy at a given price level.

The total supply of goods and services in an economy at a given price level.

The relationship between the price level and the quantity of output supplied in the short run, assuming factors like wages are fixed.

A measure of the average prices of goods and services in an economy.

The value of all final goods and services produced in an economy, adjusted for inflation.

Goods and services produced in a country and sold to other countries.

Taxes levied on the income of individuals and businesses.

A decrease in the value of the US dollar relative to other currencies.

The cost of borrowing money in the US, adjusted for inflation.

A decline in the cost of inputs used to produce goods and services.

The means of payment in an economy.

Physical money, such as bills and coins, that is in the hands of the public.

The amount of money that individuals and businesses have deposited in their checking accounts.

Money held in checking accounts that can be withdrawn on demand.

The central bank of the United States, responsible for managing the money supply and interest rates.

The role of the Federal Reserve in providing loans to banks that are unable to obtain funds from other sources.

The percentage of a bank's deposits that it is required to hold in reserve, set by the Federal Reserve.

The Federal Deposit Insurance Corporation's authority to ensure deposits up to $250,000 per account holder.

The Federal Reserve buying government bonds to increase the money supply, injecting reserves into the banking system.

Raising the discount rate leads to higher short-term market interest rates, reducing borrowing and spending.

Decreasing income tax rates to boost consumer spending and stimulate economic activity.

The total amount of money in circulation in an economy, controlled by the Federal Reserve.

The amount of reserves banks need to adjust to change the money supply, calculated using the reserve requirement ratio.

The Federal Reserve selling government bonds to reduce the money supply, draining reserves from the banking system.

The percentage of deposits that banks are required to hold in reserve, set by the Federal Reserve.

A rise in the total amount of money in circulation, often achieved by the Federal Reserve through open market purchases of bonds.

A decline in the total amount of money in circulation, often achieved by the Federal Reserve through open market sales of bonds.

Higher interest rates discourage spending and borrowing, while lower rates encourage investment and economic activity.

A sustained increase in the general price level of goods and services in an economy.

A sustained decrease in the general price level of goods and services in an economy.

The Federal Reserve can use monetary policy tools like interest rate changes and open market operations to control inflation.

Government spending and tax policies (fiscal policy) can also affect inflation.

The Federal Reserve operates independently of political pressures, making it more likely to prioritize long-term economic stability.

Tools the Federal Reserve uses to control the money supply, including open market operations, discount rate, and reserve requirements.

Policies by the Federal Reserve designed to stimulate economic activity by increasing the money supply and lowering interest rates.

Policies by the Federal Reserve designed to slow economic growth and reduce inflation by decreasing the money supply and raising interest rates.

The process by which changes in monetary policy are transmitted to the real economy, affecting spending, investment, and output.

A situation where interest rates are so low that additional monetary stimulus becomes ineffective in stimulating spending and economic activity.

Unconventional monetary policy where the Federal Reserve purchases assets beyond government bonds to inject liquidity into the economy.

The theoretical limit where interest rates cannot go below zero.