Economics Exam 9 - Macroeconomics & Policy

Front

What is the formula for GDP and what does it represent?

Back

Y = C + I + GS + (X – M)

Front

If interest rates rise, what happens to borrowing (Investment), spending (consumption), and inflation?

Back

Borrowing decreases, spending decreases, inflation decreases

Front

What are the characteristics of money?

Back

Portable, divisible, durable, scarce

Front

What happens to aggregate demand, price level (Inflation), and unemployment if Taxes Increase?

Back

Aggregate demand decreases, price level decreases, unemployment increases

Front

What is the natural rate of unemployment?

Back

4.5%

Front

What are the types of unemployment? (that we covered in class)

Back

Cyclical, structural, frictional

Front

If the Federal Reserve lowers the reserve requirement (RR), what happens to the money supply, interest rates, and aggregate demand?

Back

Money supply increases, interest rates decrease, aggregate demand increases

Front

What happens to aggregate demand and price level if government increases spending?

Back

Aggregate demand increases, price level increases

Front

What are the phases of the business cycle?

Back

Expansion, Boom, recession, Depression

Front

The process the FED uses to expand or contract the money supply is called?

Back

Monetary Policy