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Peregrine Exam Day 7 (macroeconomics)/Questions & Answers
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Peregrine Exam Day 7 (macroeconomics)/Questions& Answers
price level - -a measure of the average prices of goods and services in the
economy
-Price levels are expressed in... - -small ranges or as discrete values such as
dollar figures
-Price levels are leading indicators in the economy; - -rising prices, indicate
higher demand leading to inflation while declining prices indicate lower
demand or deflation
-In the investment world.... - -price level is referred to as support and
resistance, which help define entry and exit points
-monetary policy - -Government policy that attempts to manage the
economy by controlling the money supply and thus interest rates.
-Aggregate Demand - -the amount of goods and services in the economy
that will be purchased at all possible price levels
-How is CPI used? - -1. as a target policy: to gauge our success in low
inflation
-to measure inflationary tendencies
2. to index payments
3. to translate from nominal to real values
-Consumer transaction - -A transaction in which an individual incurs an
obligation primarily for personal, family, or household purposes.
-economic growth - -the ability of the economy to increase the production
of goods and services
-Increases in capital goods, labor force, technology, and human capital - -
can all contribute to economic growth
-Economic growth is commonly measured in terms of the increase in
aggregated market value of additional goods and services produced - -using
estimates such as GDP
-National Savings - -the sum of private savings and the budget balance, is
the total amount of savings generated within the economy
, -National savings rate is GDP that is... - -saved rather than spent in an
economy
-It is calculated as the difference between a nation's income and
consumption divided by income - -National savings rate
-The_____ is an indicator of a nation's health as it show trends in savings,
which lead to investments - -national savings rate
-Household savings can be a source of borrowing - -for governments to
provide funds for public works and infrastructure needs
-fiscal policy - -Government policy that attempts to manage the economy
by controlling taxing and spending.
-monetary policy - -Government policy that attempts to manage the
economy by controlling the money supply and thus interest rates.
-Supply-side policies - -economic policies designed to stimulate the
economy by increasing production
-expansionary fiscal policy - -An increase in government purchases of goods
and services, a decrease in net taxes, or some combination of the two for the
purpose of increasing aggregate demand and expanding real output
-expansionary monetary policy - -monetary policy that increases aggregate
demand
-consumption - -increases because borrowing is now cheaper, but also
because people need to spend less on things such as mortgage interest
payments.
-Investment - -increases because the opportunity cost of investment (the
return from sticking the money in a savings account) has fallen.
-Net export - -increase because a fall in the interest rate makes holding the
domestic currency less attractive, which causes it to depreciate, making
exports cheaper and imports more expensive.
-contractionary fiscal policy - -reduces aggregate demand
-contractionary monetary policy - -monetary policy that reduces aggregate
demand
-unemployment rate - -the percentage of the labor force that is unemployed
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