Personal finance SUCKS bruh so annoying

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51 Terms

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budget deficit

spending more than you take in (debt)

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budget surplus

the government cullects more money than it spends

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shriking economy

high unemployment, low GDP, low CPI

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expanding economy

low unemployment, high GDP, high CPI

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ecomonmic growth/ GDP ideal rate

2.5 - 3.5%

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unemployment ideal rate

3.5 - 4.5%

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Consumer Price Index/ CPI ideal rate

2%

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expansionary policy

dececrease percentages, decrease unemployment

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contractionary policy

increase percentages, increase unemployment

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3 purposes of the Fed

Regulate payment system, regulate banks, set monetary policy

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what is the FOMC

fed. open market committee - implements monetary policy. made up of 7 BOG, new york bank president, and 4 other bank presidents

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San Francisco

Regional bank #12

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BOG

7 board of governers, 14 yr terms

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Who appoints the BOG?

Appointed by president, approved by senate

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4 ways monetary policy is implemented

adjust the resrve requirement, adjust discount rate, OMO, adjust intrest rate

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What is OMO

The Fed buys/sells govt. securities (like bonds)

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What is the Federal Reserve?

the US central bank/ lender of last resort

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3 parts of the Fed

7 BOG, 12 banks, FOMC

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What does GDP stand for

Gross Domestic Product

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Jerome Powell

current fed. chairman

<p>current fed. chairman</p>
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Janet Yellen

current secretary of treasury

<p>current secretary of treasury</p>
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what is fiscal policy

governments policies to influence the economy

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CPI meaning

consumer price index (measure of inflation)

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Who’s the father of macroeconics

John Maynard Keynes

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What is bank #2

New York, New York

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What is M1

the narrowest measure of money supply

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what is the federal funds rate

the rate banks charge each other (CANNOT be directly influenced by Fed. reserve)

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when was the fed. reserve created

1913 (federal reserve act)

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2 goals of monetary policy

limit employment & control inflation

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what is money supply

the total amount of currency & liquid assets in circulation at a specific time

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what is the MAIN way the FOMC implements monetary policy

adjusts the IROB & RRP to raise/lower the FFR target range

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the Fed dual mandate

Maximum employment & price stability

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what interest rates are raised/lowered by the Fed?

IORB, ON RRP, Discount rate (in turn affects the FFR)

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what is arbitrage

the act of buying and selling simultaneously for profit

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what is reservation rate

the lowest rate a buyer would accept

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money multiplier equation

1 divided by Reserve requirement

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what is reserve requirement

the amount of $ a bank must have in supply

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Inflation is…

…too much money chasing too few goods

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official name for US dollar

Federal Reserve Note

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what manufactures coins

The US Mint

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what prints dollar bills

The Bureau of Engraving & Printing

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what is the majority of US revenue from

Individual Income Taxes

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3 categories of expenditures

Mandatory, Discretionary, Interest

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Nominal GDP vs real GDP

nominal is w/o adjustments, real gdp adjusts for inflation

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Business cycle

knowt flashcard image
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money is 3 things…

medium of exchange, unit of account, a store of value

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6 characteristics of money

Divisible, Portable, Acceptable, Scarce, Durable, Stable

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what is fractional reserve banking?

when the bank keeps a portion of each deposit then loans out the rest

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what is FIAT money?

money backed by the people’s confidence. not by gold/silver

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what is legal tender?

any currency declared legal by a government

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how does the FFR influence us consumers?

it influences interest rates and borrowing