Untitled Flashcards

Front

These actions tend to drive up the interest rate charged on bank loans and the
interest rate on bonds

Back

WHAT IS HOUSEHOLDS AND FIRMS TRYING TO INCREASE THE
AMOUNT OF MONEY THEY HOLD BY WITHDRAWING FUNDS FROM
BANKS, BORROWING FROM BANKS, OR SELLING FINANCIAL ASSETS,
SUCH AS BONDS WHEN PRICE LEVEL RISES

Front

As a result of it, firms will borrow less to build new factories or to install new
machinery and equipment, and households will borrow less to buy new houses

Back

WHAT IS A HIGHER INTEREST RATE

Front

Because of one thing causing the other, it reduces its spending; it also reduces the
quantity of goods and services demanded

Back

WHAT IS A HIGHER PRICE LEVEL INCREASING THE INTEREST RATE
AND REDUCES INVESTMENT SPENDING

Front

Because of one thing causing the other, it increases its spending; it also increases
the quantity of goods and services demanded

Back

WHAT IS A LOWER PRICE LEVEL DECREASE THE INTEREST RATE
AND INCREASES INVESTMENT SPENDING?

Front

It equals spending by foreign households and firms on goods and services
produced in the United States minus spending by U.S. households and firms on
goods and services produced in other countries

Back

WHAT ARE NET EXPORTS

Front

The categories that the variables that shift the aggregate demand curve fall into

Back

WHAT ARE CHANGES IN GOVERNMENT POLICIES, CHANGES IN THE
EXPECTATIONS OF HOUSEHOLD AND FIRMS, CHANGES IN FOREIGN
VARIABLES

Front

The federal government uses two policies to shift the aggregate demand curve

Back

WHAT ARE MONETARY POLICY AND FISCAL POLICY?

Front

It involves the Federal Reserve-the nation’s central bank-takes to manage the
money supply and interest rates and to ensure the flow of funds from lenders to
borrowers.

Back

WHAT IS MONETARY POLICY

Front

Because of it, U.S. exports will become relatively more expensive, and foreign
imports will become relatively less expensive. Some consumers in foreign
countries will shift from buying U.S. products to buying domestic products, and
some U.S. consumers will also shift from buying U.S. products to buying
imported products, U.S. exports will fall, and U.S. imports will rise, causing net
exports to fall, thereby reducing the quantity of goods and services demanded

Back

WHAT IF THE PRICE LEVEL IN THE UNITED STATES RISES RELATIVE
TO THE PRICE LEVEL IN OTHER COUNTRIES

Front

It causes net exports to rise, thereby increasing the quantity of goods and services
demanded

Back

WHAT IS A LOWER PRICE LEVEL IN THE UNITED STATES RELATIVE
TO THE PRICE LEVEL IN OTHER COUNTRIES