Studied by 10 people
includes 4.7 - loanable funds market
fiscal policy
typically designed to manipulate AD and "fix" the economy
sticky prices
prices that move to their equilibrium values very slowly
net export effect
the process of how expansionary fiscal policy decreases net exports due to rising interest rates
human capital
the skills and knowledge gained by a worker through education and experience
technology
a nation's knowledge of how to produce goods in the best possible way
investment tax credit
a reduction in taxes for firms that invest in new capital like a factory or piece of equipment
loanable funds market
model of the way money from savers makes its way into the hands of borrowers
open economy
one that interacts freely with other economies around the world
Shifters of Loanable Funds Demand
change in borrowing by government, businesses, or consumers
Shifters of Loanable Funds Supply
change in private savings, public savings, or foreign investment
national saving
all of a nation's private and public saving
closed economy
one that does not interact with other economies
equilibrium interest rate
where the supply and demand for loanable funds are equal
federal budget deficit
when government spending exceeds tax revenue
crowding out
if government borrowing causes a decrease in private borrowing
federal budget surplus
when government expenditures are less than tax revenues
output gap
the difference between actual output and potential output
the Phillips curve
a model that shows the inverse relationship of wages or prices and unemployment
monetarists
economists who believe that the money supply is the primary factor affecting demand in the short run
Short-Run Phillips Curve (SRPC)
the inverse short-run relationship between the unemployment rate and the inflation rate
Long-Run Phillips Curve (LRPC)
a curve illustrating that there is no relationship between the unemployment rate and inflation in the long-run; vertical at the NRU
quantity theory of money (QTM)
there is a direct relationship between the quantity of money in an economy and the price level of goods and services
equation of exchange
M x V = P x Y
velocity of money
ratio of nominal GDP to the money supply
balanced budget
achieved when tax revenues are adequate to cover government expenditures
economic growth
an increase in the aggregate production of goods and services in an economy from one period of time to another
productivity
output per unit of input
real GDP per capita
real GDP divided by the total population
aggregate production function
a measure that shows how an economy's aggregate output depends on the determinants of economic growth
public policy
a collective term for the plans and actions at any level of government that affect that government's constituents
property rights
the ownership and control of a specific good or resource
private property
property owned and managed by an individual or a legal group of owners
public property
property owned by the government
collective property
controlled or owned by a group or combination of individuals or entities that jointly control access to and use of the property
free trade
allows countries to concentrate on producing the goods in which they have a comparative advantage and makes trade mutually beneficial
tariffs
duties that governments impose on imported or exported goods
quotas
limits on the amounts of goods that can be imported
supply-side fiscal policy
provides incentives to producers to increase aggregate supply
Note 
Flashcard (41)