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Final Exam Review Principles of Macroeconomics

The document outlines various economic terms related to macroeconomics, finance, unemployment, monetary policy, and banking. It defines terms like bond, budget deficit, crowding out, compounding, collective bargaining, central bank, currency, demand deposits, discount rate, and money supply. The terms are for an economics exam and cover topics from chapters 13-16, including government spending and borrowing, investment, unemployment rates, and the role of the Federal Reserve.

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267 views3 pages

Final Exam Review Principles of Macroeconomics

The document outlines various economic terms related to macroeconomics, finance, unemployment, monetary policy, and banking. It defines terms like bond, budget deficit, crowding out, compounding, collective bargaining, central bank, currency, demand deposits, discount rate, and money supply. The terms are for an economics exam and cover topics from chapters 13-16, including government spending and borrowing, investment, unemployment rates, and the role of the Federal Reserve.

Uploaded by

Kazım
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Principles of Macroeconomics Econ 201 Section 3 Final Exam key Terms Exam Date May 9 2012 @ 6:30p.m.

Chapter 13
bond a certificate of indebtedness

budget deficit a shortfall of tax revenue from government spending budget surplus crowding out an excess of tax revenue over government spending a decrease in investment that results from government borrowing

financial financial institutions through which savers can indirectly provide funds to borrowers intermediaries financial markets financial system market for loanable funds mutual fund national saving (saving) financial institutions through which savers can directly provide funds to borrowers the group of institutions in the economy that help to match one persons saving with another persons investment the market in which those who want to save supply funds and those who want to borrow to invest demand funds an institution that sells shares to the public and uses the proceeds to buy a portfolio of stocks and bonds the total income in the economy that remains after paying for consumption and government purchases

private saving the income that households have left after paying for taxes and consumption public saving stock the tax revenue that the government has left after paying for its spending a claim to partial ownership in a firm

Chapter 14
compounding the accumulation of a sum of money in, say, a bank account, where the interest earned remains in the account to earn additional interest in the future diversification the reduction of risk achieved by replacing a single risk with a large number of smaller, unrelated risks finance firm-specific risk fundamental analysis the field that studies how people make decisions regarding the allocation of resources over time and the handling of risk risk that affects only a single company the study of a companys accounting statements and future prospects to determine its value

future value

the amount of money in the future that an amount of money today will yield, given prevailing interest rates risk that affects all companies in the stock market

market risk

present value the amount of money today that would be needed, using prevailing interest rates, to produce a given future amount of money random walk risk aversion the path of a variable whose changes are impossible to predict a dislike of uncertainty

Chapter 15
collective bargaining the process by which unions and firms agree on the terms of employment

cyclical the deviation of unemployment from its natural rate unemployment discouraged workers efficiency wages individuals who would like to work but have given up looking for a job above-equilibrium wages paid by firms to increase worker productivity

frictional unemployment that results because it takes time for workers to search for the jobs that best unemployment suit their tastes and skills job search labor force labor-force participation rate the process by which workers find appropriate jobs given their tastes and skills the total number of workers, including both the employed and the unemployed the percentage of the adult population that is in the labor force

natural rate of the normal rate of unemployment around which the unemployment rate fluctuates unemployment strike the organized withdrawal of labor from a firm by a union

structural unemployment that results because the number of jobs available in some labor markets is unemployment insufficient to provide a job for everyone who wants one unemployment a government program that partially protects workers incomes when they become insurance unemployed unemployment the percentage of the labor force that is unemployed rate union a worker association that bargains with employers over wages, benefits, and working conditions

Chapter 16
central bank commodity money currency an institution designed to oversee the banking system and regulate the quantity of money in the economy money that takes the form of a commodity with intrinsic value the paper bills and coins in the hands of the public

demand deposits discount rate federal funds rate Federal Reserve (Fed) fiat money fractionalreserve banking liquidity medium of exchange monetary policy money money multiplier money supply open-market operations reserve ratio reserve requirements reserves store of value

balances in bank accounts that depositors can access on demand by writing a check the interest rate on the loans that the Fed makes to banks the interest rate at which banks make overnight loans to one another the central bank of the United States money without intrinsic value that is used as money because of government decree a banking system in which banks hold only a fraction of deposits as reserves the ease with which an asset can be converted into the economys medium of exchange an item that buyers give to sellers when they want to purchase goods and services the setting of the money supply by policymakers in the central bank the set of assets in an economy that people regularly use to buy goods and services from other people the amount of money the banking system generates with each dollar of reserves the quantity of money available in the economy the purchase and sale of U.S. government bonds by the Fed the fraction of deposits that banks hold as reserves regulations on the minimum amount of reserves that banks must hold against deposits deposits that banks have received but have not loaned out an item that people can use to transfer purchasing power from the present to the future

unit of account the yardstick people use to post prices and record debts

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