Macroeconomics Study Topics and Concepts
Classified in Economy
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Which topic is studied in Macro?
ALL (Output growth, Unemployment, Inflation)
Which is not a macroeconomic policy of governments
Stock prices
Equilibrium is defined as...
Aggregate output equals consumption minus investment
The saving/investment approach suggests that an economy is equilibrium when..
S=I
If S=-Co+(1-C1)(Y-T), the term (1-C1) is called the...
Marginal propensity to save
Which of the following indexes are used to measure the overall price?
ALL of ABOVE (CPI, PPI, GDP deflator)
The equilibrium condition for the goods market is called the...
IS relation
A decrease in the real money supply will shift the LM curve...
Upward and to the left
Lower real income... the demand for money and a lower price level... the demand for money
Decreases, increases
Liabilities of banks include
Demand deposits
An increase in real exchange rate, e, leads to
Higher imports
An increase in government spending will...
Rightwards shifts in the IS curve
A monetary contraction will have the effects...
None of above
An increase in foreign demand leads to
Improvement in the trade balance
A reduction in government spending will cause
A leftward shift in the IS curve
Define the LM curve
The combinations of i and Y that maintain equilibrium in financial markets
Define the IS curve
The combinations of i and Y that maintain equilibrium in the goods market
Suppose the central bank decides to conduct an open market purchase of bonds
The LM curve shifts down
How Central Banks Control The Supply Of Money
- Print More Money
- Set the Reserve Requirement
- Influence Interest Rates
- Engage in Open Market Operations
- Introduce a Quantitative Easing Program
What is the liquidity trap?
Is the situation in which prevailing interest rates are low and savings rates are high, making monetary policy ineffective. In a liquidity trap, consumers choose to avoid bonds and keep their funds in savings because of the prevailing belief that interest rates will soon rise.
J-Curve
A type of diagram where the curve falls at the outset and eventually rises to a point higher than the starting point. The J-curve effect is most notable in both economics and private equity funds; after a certain policy or investment is made, an initial loss is followed by a significant gain.