CLEP Macro Economics

O m2 a type of money that includes m1 plus other

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o M2: A type of money that includes M1 plus other relatively liquid assets, such as savings deposits, small- denomination time deposits (CDs), and money market mutual fund shares. o M3: A type of money that includes M2 plus large time deposits amounting to more than $100,000. o Macro equilibrium: A combination of price level and real GDP that is compatible with both aggregate demand and aggregate supply. o Macroeconomics: The part of economics concerned with the economy as a whole, including its major aggregate parts, such as households, businesses, and government.
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o Marginal analysis: Comparison of extra or incremental benefits and costs. o Marginal benefit: The extra reward or advantage above what you have already received; the change in total benefit of producing one additional unit of outcome. o Marginal cost: The extra cost that is over and above the cost you have already accumulated; the change in total cost of producing one additional unit of outcome. o Marginal propensity to consume (MPC): The fraction of each additional dollar of disposable income spent on consumption, represented as the change in consumption divided by the change in disposable income. o Marginal propensity to save (MPS): The fraction of each additional dollar of disposable income saved, represented as the fraction of any change in income saved. o Marginalism: The analysis of marginal or extra benefits and costs when making decisions. o Market: Any place where goods and services are bought and sold. o Market economy: An economic system that gives property rights to individuals and depends on market forces to coordinate economic activity. o Maximizing behaviors: Market participants engage in actions intended to achieve the highest level of their goals (utility, profit, and welfare). o Misery index: An economics term referring to the sum of inflation rates and unemployment rates; it is used to measure stagflation. o Monetary policy: The use of controls over the money supply to alter interest rates and total spending in the economy by managing banking system reserves. o Money: Any item that is accepted in exchange for goods and services that can be stored as wealth and serves as a reference for the value of other goods and services. o Money multiplier: The number of deposit (loan) dollars that the banking system can create from $1 of excess reserves; equal to 1 divided by the required reserve ratio. o Money supply: This commonly refers to M1 currency and transaction accounts held by the public; also more generally refers to M1, M2, and M3, which combined include all assets readily convertible to cash, including both small and large denomination CDs. o Multiplier: The ratio of a change in GDP to an initial change in spending. This is the number by which a change in any component of aggregate expenditures or aggregate demand must be multiplied to find the resulting change in the GDP. o
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o M2 A type of money that includes M1 plus other relatively...

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