Chapter 13
Page
number
Define:
GDP
355
Total dollar value of all final goods
and services produced in a nation in a
single year
Welfare and other supplementary
payments that the government makes
to individuals
Income remaining for people to spend
or save after all taxes have been paid
Prolonged decline in the general price
levels of goods and services
Total income that individuals receive
before personal taxes are paid
Major slowdown of economic activity
during which millions are
unemployed, businesses fail and the
economy operates below capacity
Measure of the change in price over
time of a specific group of goods and
services purchased by households
Total income earned by everyone in
the economy
Irregular changes in the level of total
output measured by real GDP
Prolonged decline in the general price
levels of goods and services
Changes in the prices producers
charge for the goods they sell
Overestimates inflation
360
Contraction
362
Depression
366
Leading indicators
Transfer payments
Disposable personal income
Deflation
Personal income
Depression
CPI
National income
Business cycle
Inflation
What does producer price index
measure?
Why have some economists
criticized CPI?
What is the part of the business
cycle where the economy starts
to slow down?
What did the US experience in
the 1930’s?
What type of indicators are new
orders for consumer goods and
changes in the number of
building permits issued for
private homes?
353
Chapter 14
Barter
Exchange of goods and services for
other goods and services
Debit card
Overdraft checking
Thrift institutions
ATM
M1
Legal tender
M2
Checking account
Electronic funds transfer
ATMS receive deposits, give out
funds, accept payments and
____?
What are the functions of
money?
What is a drawback of electronic
funds transfer?
385
What is M2?
391
What is representative money?
378
375-377
385
Card used to make cashless purchases
Checking account that allows
customers to write checks for more
money than they have in their
accounts
Mutual savings banks, savings and
loan institutions, and credit unions
Units that allow customers to access
their banking without the help of a
teller
Moneys that can be spent
immediately and against which checks
can be drawn
Money that must by law be accepted
for payment of public and private
debts
Moneys that can be spent
immediately and against which checks
can be drawn plus near monies such
as money market accounts or
Eurodollars
Account from which deposited money
can be withdrawn at any time by
writing a check
System of putting onto computers all
the various banking functions that in
the past were handled on paper
Transfer funds between accounts
Medium of exchange, unit of
accounting, store of value
The possibility of tampering is
increased because records are stored
in a computer
A broader definition of the money
supply than M1
Backed by a valuable item, such as
gold
Chapter 15
Federal Open Market Committee
Fractional reserve banking
Discount rate
12-member committee in the Fed
System that decides how the Fe
should control the nation’s money
supply
System in which only a portion of the
deposits in a bank is kept on reserve
Interest rate that the Fed charges on
412
loans to member banks
Policy that involves changing the rate
of growth of the supply of money in
circulation in order to affect the cost
and availability of credit
Rate of interest that banks charge on
loans to their best business customers
Federal Reserve System
Method by which a check that has
been deposited in one institution is
transferred to the issuer’s depository
institution
Regulations set by the Fed requiring
banks to keep a certain percentage of
their deposits as cash in their own
vaults or as deposits in their district
Fed banks
Buying and selling of US government
securities by the Fed in order to affect
the money supply
Interest rate banks charge each other
on loans
Changing reserve requirements
401
12
Monetary policy
Prime rate
Fed
Check clearing
Reserve requirements
Open-market operations
Federal funds rate
How can the Federal Reserve
affect the money supply?
What is the number of Regional
Federal Reserve banks in the US?
What type of institution must
belong to the Federal Reserve?
What was the chairman of the
Federal Reserve in the 1990s?
Why has measuring the money
supply become more difficult in
recent years?
National banks
411
Alan Greenspan
416
More investment opportunities exist,
and the use of credit cards has
changed the way money circulates
through the economy
Chapter 16
Proportional tax
Supplemental Security income
Medicaid
Budget deficit
Externalities
Tax that takes the same percentage of
all incomes
Federal programs that includes food
stamps and payments to senior
citizens, the blind, and disabled
State and federal public assistance
program that helps pay health-care
costs for low-income and disabled
persons
Amount by which the government’s
spending exceeds its revenues
Economic side effects or byproducts
431
that affect uninvolved third parties
Publicly used facilities, such as schools
and highways, built by governments
Government programs that pay
benefits to retired and disable
workers, their families and the
unemployed
Total amount of debt owed by the
federal government
Government program that provides
health care for senior citizens
Tax that takes a higher percentage of
lower incomes than higher incomes
Government could increase
employment by raising spending
Public assistance programs
431
Social Security
425
Has grown much faster than the
population
Temporary Assistance for Needy
Families
Public-works projects
Social insurance programs
National debt
Medicare
Regressive tax
What did John Maynard Keynes
believe?
What are programs aimed only
at people who are poor or
disabled known as?
What is a federal program that
provides monthly payments to
people who are retired or unable
to work called?
What has happened to the size
of the government since WWII?
What can families that are in
need of aid to raise their young
children qualify for?
428
431
Chapter 17
Demand-pull inflation
Time lags
Stabilization policies
Full employment
Fiscal policy
Underground economy
Monetarism
Theory that prices rise as the result of
excessive demand
Periods between the time fiscal policy
is enacted and the time it becomes
effective
Attempts by the federal government
to keep the economy healthy
Condition of the economy when the
unemployment rate is lower than a
certain number established by
economists’ studies
Federal government’s use of taxation
and spending policies to affect overall
business activity
Transactions by people who do not
follow federal and state laws with
respect to reported earnings
Theory that deals with the
relationship between the amount of
Stagflation
Monetary rule
Cost-pull inflation
What is stagflation caused by?
What happened to consumer
demand in the 1930’s?
What economist is most closely
associated with monetarism?
What does the term leakage
refer to?
What is high unemployment
usually a sign of?
455
money the Fed places in circulation
and the level of activity in the
economy
Combination of inflation and low
economic activity
Belief that the Fed should allow the
money supply to grow at a fixed rate
Theory that wage demands of labor
unions and excessive profit motives of
large corporations push up prices
causing stagflation
Cost-push inflation
Consumer demand fell significantly
466
Milton Friedman
458
Income that does not follow the
circular flow
Purchasing has slowed
452