Econ Exam 2

unaffected

When the price floor is below the equilibrium or the price ceiling is above the equilibrium, the market is ___

72/x

In the rule of 72, “The variable that grows at a constant rate of x% will double in value in about _____ periods

unemployed / labor force

The unemployment rate is calculated by ____

False

True or False? Expansionary and contractionary monetary and fiscal policies shift cause a shift in the long run aggregate supply curve

Empirical Strategy

_____ ______ was a paper by Acemoglu, Johnson, and Robinson that proved that institutional strength has an effect on economic growth while accounting for reverse causality in Adam Smith’s original idea.

Keynesians

_____ believe that economic intervention is necessary, and that booms and busts are created by the “animal spirits” (optimistic vs pessimistic views) of the market participants.

Austrians

____ believe that intervening in the economy will make it worse and that booms and busts are caused by artificial expansion

Washing Machine, Cat

Taleb critiqued Keynesians by saying that they “view the economy as a ______ _____, but it is really more like a ____” Meaning that it benefits from small stresses.

Help

Within a negative externality, taxes ___ the economy

worse

Within a positive externality, moving from the social equilibrium to the private equilibrium makes the welfare of society _____ off

better

Within a positive externality, moving from the private equilibrium to the subsidy equilibrium makes the welfare of society _____ off

Recession

_____ leads to wages falling

Inflation

______ leads to wages rising

Temporary

____ supply shocks only effect the short run. From the short run to the long run, the curve (be it supply or demand) shifts back to it’s original position. From the initial to the long run, P and Q stay the same.

Permanent

_____ supply shocks effect (and shift) the long run aggregate supply curve.

expansionary, right

For a permanent POSITIVE supply shock, the monetary/fiscal policy enacted by the government is _________ because they want to shift the AD curve to the _____ to match the LRAS curve’s new position

contractionary, left

For a permanent NEGATIVE supply shock, the monetary/fiscal policy enacted by the government is _________ because they want to shift the AD curve to the _____ to match the LRAS curve’s new position

Supply

in the Federal Funds Market, ____ is the Banks who have more reserves than they need

Demand

In the Federal Funds Market ___ is the Banks who have less reserves than they need

Price

In the Federal Funds Market, the ____ is the Federal Funds/interest Rate

Supply, right

If the fed BUYS BONDS, it shifts the ____ curve to the ____

Supply, left

If the fed SELLS BONDS, it shifts the ____ curve to the _____

Left, Right

If the fed LOWERS RESERVE REQUIREMENTS, the demand curve shifts ____, and the supply curve shifts ___

Right, Left

If the fed RAISES RESERVE REQUIREMENTS, the demand curve shifts ____ and the supply curve shifts _____

Demand, left

If the fed LOWERS the DISCOUNT RATE, the ______ curve is shifted to the _____

Demand, right

If the fed RAISES the DISCOUNT RATE, the ______ curve is shifted to the _____

Supply, right

If the fed LOWERS INTEREST ON RESERVE BALANCES, the ____ curve shifts to the ____

Supply, left

If the fed RAISES INTEREST ON RESERVE BALANCES, the ____ curve shifts to the ____

Supply, Right

If the FEDERAL FUNDS RATE is LOWERED, the _____ curve shifts _____

Supply, Left

If the FEDERAL FUNDS RATE is RAISED, the _____ curve shifts _____