06E:002:AAA & BBB Principles of Macroeconomics Name_
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) In the circular flow model, the value of total income
Chapter 13~Aggregate Demand and Aggregate Supply Analysis
April 11, 2014
Aggregate demand and aggregate supply model: A model that explains short-run fluctuations in real
GDP and the price level
Aggregate demand (AD) curve: A curve that shows the relation
GDP = output = production= income = expenditures
GDP deflator = (nominal GDP / real GDP) x 100
GDP = consumption + investment + government purchases + net exports (exports imports)
Real GDP per capita = (countrys real GDP / countrys population)
May 5, 2014
Chapter 16~Fiscal Policy
The Employment Act of 1946 committed the federal government to intervening in
the economy to promote maximum employment, production, and purchasing
Consequently, the Fed closely monitors the economy, the FOMC me
February 7, 2014
Chapter 3 Cont.
The demand curve shows how quantity demanded changes as price changes; other
demand variables are held constant.
Change in quantity demanded: if prices increases, move up and to the left along a
stationary demand curve to
February 21, 2014
Investment: Spending by firms on new factories, office buildings, machinery , and
additions to inventories, plus spending by households and firms on new houses.
In economics, investment refers to the purchase of physical capita
April 25, 2014
Banks accept deposits, hold a percentage of those deposits as required reserves,
sometimes hold a portion of those deposits as excess reserves, and lend the rest to
household and firms.
When borrowers make purchases with the loan
April 14, 2014
When interest rates decrease (increase), firms borrow more (less) to invest in
capital and households borrow more (less) to invest in new housing and to spend on
This increase (decreases) I and C, which shifts
Federal Reserve system and Monetary Policy
Fractional reserve banking system: A banking system in which banks keep less than 100 percent of
deposits as reserves.
On a typical day, about as much money is deposited as is withdrawn from any given
Economic growth occurs-technology improves or capital per hour worked increases
Financial System: the system of financial intermediates through which firms acquire funds from
Financial Markets: markets where financial securities, su
Chapter 2 Study Suggestions
Before lecture on Friday, August 26:
Read pages 36-57 of the textbook.
Note the definitions of all of the following terms: scarcity, production possibilities frontier (PPF),
opportunity cost, economic growth, trade, abs
Chapter 3 Study Suggestions
Before lecture on Wednesday, September 7:
Read pages 64-89 of the textbook, skipping the sections What Explains the Law of Demand? and
The Effect of Shifts in Demand and Supply over Time.
Note the definitions of all of
Chapter 7 Study Suggestions
Before lecture on Wednesday, September 14:
Read pages 208-229 of the textbook, skipping the sections Measuring GDP Using the Value-Added
Method, National Income, Personal Income, Disposable Personal Income, and The Divi
Chapter 8 (Part 1) Study Suggestions
Before lecture on Monday, September 26:
Read pages 234-250 & 260-263 of the textbook, skipping the section The Establishment Survey:
Another Measure of Employment.
Note the definitions of all of the following t
Chapter 1 Study Suggestions
Before lecture on Wednesday, August 24:
Read pages 2-19 of the textbook, skipping the sections Efficiency and Equity and Appendix: Using
Graphs and Formulas.
Note the definitions of all of the following terms: scarcity,
Economics- Study of the choices people make to attain their goals, given scare resources
Macro- Study of economy
Micro- study of firms/households
Economic Model- simplified version of reality, used to analyze real world economic