Macroeconomics Private and Public Choice 16E Chapter 9
Fiscal Policy - (correct Answer) - The use of government taxation and expenditure policies for the
purpose of achieving macroeconomic goals.
Monetary Policy - (correct Answer) - The deliberate control of the money supply, and, in some cases,
credit conditions, for the purpose of achieving macroeconomic goals.
Money Supply - (correct Answer) - The supply of currency, checking account funds, and traveler's checks.
These items are counted as money because they are used as the means of payment for purchases.
Resource Market - (correct Answer) - A highly aggregated market encompassing all resources (labor,
physical capital, land, and entrepreneurship) contributing to the production of current output. The labor
market is the largest component of this market.
Goods and services market - (correct Answer) - A highly aggregated market encompassing the flow of all
final-user goods and services. The market counts all items that enter into GDP. Thus, real output in this
market is equal to real GDP.
Loanable Funds Market - (correct Answer) - A general term used to describe the market that coordinates
the borrowing and lending decisions of business firms and households. Commercial banks, savings and
loan associations, the stock and bond markets, and insurance companies are important financial
institutions in this market.
Saving - (correct Answer) - The portion of after-tax income that is not spent on consumption. Saving is a
"flow" concept.
Foreign Exchange Market - (correct Answer) - The market in which the currencies of different countries
are bought and sold.
Exchange Rate - (correct Answer) - The price of one unit of foreign currency in terms of the domestic
currency.
Aggregate Demand Curve - (correct Answer) - A downward-sloping curve showing the relationship
between the price level and the quantity of domestically produced goods and services all households,
business firms, governments, and foreigners (net exports) are willing to purchase.
Aggregate Supply Curve - (correct Answer) - The curve showing the relationship between a nation's price
level and the quantity of goods supplied by its producers. In the short run, it is an upward-sloping curve,
but in the long run the aggregate supply curve is vertical.
Equilibrium - (correct Answer) - A balance of forces permitting the simultaneous fulfillment of plans by
buyers and sellers.
Money Interest Rate - (correct Answer) - The percentage of the amount borrowed that must be paid to
the lender in addition to the repayment of the principal. The money interest rate overstates the real cost
of borrowing during an inflationary period.
Fiscal Policy - (correct Answer) - The use of government taxation and expenditure policies for the
purpose of achieving macroeconomic goals.
Monetary Policy - (correct Answer) - The deliberate control of the money supply, and, in some cases,
credit conditions, for the purpose of achieving macroeconomic goals.
Money Supply - (correct Answer) - The supply of currency, checking account funds, and traveler's checks.
These items are counted as money because they are used as the means of payment for purchases.
Resource Market - (correct Answer) - A highly aggregated market encompassing all resources (labor,
physical capital, land, and entrepreneurship) contributing to the production of current output. The labor
market is the largest component of this market.
Goods and services market - (correct Answer) - A highly aggregated market encompassing the flow of all
final-user goods and services. The market counts all items that enter into GDP. Thus, real output in this
market is equal to real GDP.
Loanable Funds Market - (correct Answer) - A general term used to describe the market that coordinates
the borrowing and lending decisions of business firms and households. Commercial banks, savings and
loan associations, the stock and bond markets, and insurance companies are important financial
institutions in this market.
Saving - (correct Answer) - The portion of after-tax income that is not spent on consumption. Saving is a
"flow" concept.
Foreign Exchange Market - (correct Answer) - The market in which the currencies of different countries
are bought and sold.
Exchange Rate - (correct Answer) - The price of one unit of foreign currency in terms of the domestic
currency.
Aggregate Demand Curve - (correct Answer) - A downward-sloping curve showing the relationship
between the price level and the quantity of domestically produced goods and services all households,
business firms, governments, and foreigners (net exports) are willing to purchase.
Aggregate Supply Curve - (correct Answer) - The curve showing the relationship between a nation's price
level and the quantity of goods supplied by its producers. In the short run, it is an upward-sloping curve,
but in the long run the aggregate supply curve is vertical.
Equilibrium - (correct Answer) - A balance of forces permitting the simultaneous fulfillment of plans by
buyers and sellers.
Money Interest Rate - (correct Answer) - The percentage of the amount borrowed that must be paid to
the lender in addition to the repayment of the principal. The money interest rate overstates the real cost
of borrowing during an inflationary period.
