Decrease AD Increase P increases with more spending P increase more production

Decrease ad increase p increases with more spending p

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Decrease, AD, Increase P increases with more spending, P increase → more production Result: Y increases and millions more employed (which is the idea by the stimulus from the FED) Question: You’re using AD & SRAS to analyze the economy. What is the correct order? (eq = equilibrium) Event, curve shifts, new eq., new P&Y For example, question previous Worksheet Question 2: After the oil price rise, the economy ____ be in equilibrium and there was ____. Would, inflation1. Oil shock, 2. Sras shifts, 3. New eq., 4. P increases and Y decreases Energy (oil) price shock 1973, 1979, 1990, 2008
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One of the most common causes of recession (section 3) Worksheet Question 3: As a result of the change in G, there is ___ and ____. Question: How do AD and SRAS work together? Question: What influences prices (P) and production and spending (Y)? Section 5: Monetary & Fiscal Policy Financial Markets and assets What do they have in common? Checking account ex) PNC Student loan Car loan Mortgage Bond Stock You can touch assets of all of these things, but not the things themselves All are “financial assets” - a legal claim for future payments They are assets for one party & a liability for the other party Assets Something you own Ex) Checking account Liability Something you owe Ex) Student loan, mortgage Security Financial asset that can be sold: stocks & bonds Mutual fund Funds pooled with other investors to buy securities Ex) vanguard: 20 M investors Ex) $157 B in Vanguard 500 m.f. Stock is A “share”is ownership in a corporation Anyone can buy or sell Owners receive profits as “dividends” Hopefully selling price > purchase price Sold by corporations to buy K (IPO)
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Ex) Instructure (11/15), Snapchat (3/17) VERY difficult to predict stock prices Ex) One year U.S Treasury Bill (T-Bill) auction on 3.28.17 Investors bid to pay now to receive a set amount ($100 to $5 million - “face value”) in 1 year from the U.S. Treasury For $100 face value, winners pay $98.96 The borrower (bond issuer) promises a fixed nominal payment to the investor (lender or bond buyer) at a set date Example Bonds… 8 year treasury note On 2.15.79 investors paid $1000 for this bond Got $1000 on 2.15.87, Twice a year from 1979 till 1987 they got $45 (coupon) Most bonds: >1 year maturity with twice annual payments (coupons) + face value Ex) US treasury bonds: 20-30 years Ex) Us treasury notes: 2-10 years Ex) US treasury bills: < 1 year & no coupon (less than.equal to) Question: Bonds ____ a security and they ____ a liability for the issuer Are, are Bond: A security sold by large business or governments issuer that offer fixed future payments to buyers Existing bonds are bought and sold in very active markets- prices change by the second Question: If there was unexpected inflation bond owners would be ___ and firms and governments that issued bonds would be _____.
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