Econ 114 Mixed Bag

  1. Define Crowding-Out Effect
    Fiscal Policy Causes: Increased demand ---> Increased Interest Rate ---> Decreased Investment
  2. Political Business Cycle
    Politicians will manipulate the economy to increase their chances of being re-elected
  3. What is a major reason why public debt cannot bankrupt the Federal govermnent?
    Public debt can be easily refinanced.
  4. A tax reduction of a specific amount will be more expansionary,
    The smaller the country's MPC
  5. Banks create money when they:
    Allow loans to mature
  6. Granting a bank loan creates money; repaying a bank loan destroys money
    Granting a bank loan creates money; repaying a bank loan destroys money
  7. What is one significant characteristic of frictional reserve banking?
    Banks can create money through lending their reserves
  8. What is considered a strength of monetary policy compared to fiscal policy?
    The ability to increase the velocity of money
  9. The Net Export Effect:
    Strengthens the stimulative effect of expansionary monetary policy.
  10. The Shape of the aggregate demand curve is determined by:
    The real balances effect, interest rate effect and foreign trade effect
  11. What will not cause the consumption schedule to shift?
    A change in consumer incomes
  12. Okun's Law:
    Measures the tradeoff between rate of inflation and rate of unemployment
  13. GDP Inclues:
    Final, but not intermediate, goods
  14. If depreciateion exceeds investment,
    the economy's stock of capital is shrinking
  15. Opportunity cost is defined as:
    The value of the best forgone alternative
Card Set
Econ 114 Mixed Bag
Econ 114 Mixed Bag