review3spring2004 - ECON 102 SPRING 2004 REVIEW SHEET FOR...

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E CON 102 S PRING 2004 R EVIEW S HEET FOR M ATERIAL AFTER M IDTERM 2 This is not meant to be a complete list, but is instead a guideline of many of the topics covered in the last part of the course. Professor Kelly reserves the right to ask questions about material that is not listed here, or that is found in your text but was not covered in the large lecture. Please review your notes carefully, work the practice questions, and take care of yourself physically and mentally in preparation for the exam. If you need additional questions remember to check the website for help: www.ssc.wisc.edu/~ekelly/econ102 T HE B ANKING S YSTEM AND T HE M ONEY S UPPLY Terms: Aggregate demand (AD) curve - A curve indicating equilibrium GDP at each price level. Aggregate supply (AS) curve - A curve indicating the price level consistent with firms' unit costs and markups for any level of output over the short run. Balance sheet - A financial statement showing assets, liabilities, and net worth at a point in time. Banking panic - A situation in which depositors attempt to withdraw funds from many banks simultaneously. Bond - An IOU issued by a corporation or government agency when it borrows funds. Cash in the hands of the public - Currency and coins held outside of banks. Demand deposit multiplier - The number by which a change in reserves is multiplied to determine the resulting change in demand deposits. Under the assumption of no monetary drains and zero excess reserves it must be that DD = reserves/RRR . The money multiplier is equal to 1/RRR. Demand shock - Any event that causes the AD curve to shift. Discount rate - The interest rate the Fed charges on loans to banks. Excess demand for bonds - The amount of bonds demanded exceeds the amount supplied at a particular interest rate. Excess reserves - Reserves in excess of required reserves. Excess supply of money - The amount of money supplied ex-ceeds the amount demanded at a particular interest rate. Federal funds rate -
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This note was uploaded on 08/08/2008 for the course ECON 102 taught by Professor Drozd during the Spring '08 term at University of Wisconsin.

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review3spring2004 - ECON 102 SPRING 2004 REVIEW SHEET FOR...

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