Final Flashcards
(26 cards)
as higher interest rates incuces people to save more
supply of loanable funds slope upward
if congress increased the max contribution limits to tax defereed retirement acts
interest rate would decrease and the quantity of loanable funds would increase
if go increased tax on interest income
supply of loanable income would shift left
if congress institutes an investment tax credit
real interest rate and investment would rise
if deficit decreased
real interest would decrease and investment increase
m1
currency, traverlers checks, checkable and demand deposits
m2
m1 plue small time deposits, saving depostis, and money market mutual funds
quantitu of loanable funds supplied
gdp-consumption spending - gov purchases
prices rise, vale of money
falls, people hold more
decreasing the money supply
curv shifts left because less money means its more valuable
if supply increases
equilibrium of price level increases
nominal interest rate =
inflation rate plus real interest rate
used to explain the long run determits of the price level and inflation rate
quantity of theory of money
how are taxes on capital gains computed
using nominal gains. higher inflation discourages savings
how can people reduce inflation tax
holding less money
when is wealth redistributed from creditors to debtors
when inflation is unexpectly high
when does relative price variability rise
as inflation rises
an increase in the quantity of money will increase the price level
monentary nuetrality
in the short run.
nominal and real variables are intertwined and changes in the ms change real dgp
what adjus to bring the ad and supply curve back into balance
the p rice level adn quantity
what isnt included in aggregate demand module
purchases of stocks and bonds
positive things shift ad curve
right
negative things shift ad curve
left
when positive things happen, price level
rises and bargains are struck for higher wages
