VCC Economics Test 3 Study Guide

VCC Economics Test 3 Study Guide - Macro Economics Test 3...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Macro Economics – Test 3 Study Guide Discount Rate – refers to the interest rate that the Federal Reserve District Bank charges a member bank for loans Token money – refers to coins that have no intrinsic value. M1 – currency in circulation plus checkable deposits. It’s called money. Over 50% of M1 is in demand deposits. M2 – everything that is in M1 plus time deposits of savings accounts. It is referred to as Near Monies. Federal Reserve Board of Governors – has 7 members each serving a staggered 14 year term. Excess reserves – are the basis for commercial bank lending. An individual bank can only lend to the fullest extent of its excess reserves. They are the amount by which the bank’s actual reserves exceed its required reserves. Required reserves – are fractional because they are less than 100%. Required reserves have to be sent forward to the Federal Reserve. Reserves – In the Federal Reserve Banking System, reserves lost by a single bank are not lost to the system as a whole. Dollar appreciates – when the dollar appreciates it is called a strong dollar. It buys more foreign currency. Dollar depreciates – when the dollar depreciates, it is called a weak dollar and buys less foreign currency. Taxes – cause disposable income to decrease. Taxes discourage savings. Higher income taxes decrease spending and aggregate demand. Determinants of aggregate demand – things that cause the entire demand schedule to shift either right or left other than price are called determinants of aggregate demand. The number one cause is net worth or personal wealth. Determinants of aggregate supply – these are the things that cause the entire supply curve to shift either right or left other than price and the primary thing that does that is the cost of the inputs of production. Investment – total output increases by ¼% for
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 07/23/2010 for the course BUS ECO2013 taught by Professor Dr.chase during the Fall '09 term at Valencia.

Page1 / 2

VCC Economics Test 3 Study Guide - Macro Economics Test 3...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online