Peregrine Exam Day 7
price level - ANS -a measure of the average prices of goods and services in the economy
Price levels are expressed in... - ANS -small ranges or as discrete values such as dollar figures
Price levels are leading indicators in the economy; - ANS -rising prices, indicate higher demand
leading to inflation while declining prices indicate lower demand or deflation
In the investment world.... - ANS -price level is referred to as support and resistance, which
help define entry and exit points
monetary policy - ANS -Government policy that attempts to manage the economy by controlling
the money supply and thus interest rates.
Aggregate Demand - ANS -the amount of goods and services in the economy that will be
purchased at all possible price levels
How is CPI used? - ANS -1. as a target policy: to gauge our success in low inflation
-to measure inflationary tendencies
2. to index payments
3. to translate from nominal to real values
Consumer transaction - ANS -A transaction in which an individual incurs an obligation primarily
for personal, family, or household purposes.
economic growth - ANS -the ability of the economy to increase the production of goods and
services
Increases in capital goods, labor force, technology, and human capital - ANS -can all contribute
to economic growth
Economic growth is commonly measured in terms of the increase in aggregated market value of
additional goods and services produced - ANS -using estimates such as GDP
National Savings - ANS -the sum of private savings and the budget balance, is the total amount
of savings generated within the economy
National savings rate is GDP that is... - ANS -saved rather than spent in an economy
, It is calculated as the difference between a nation's income and consumption divided by income
- ANS -National savings rate
The_____ is an indicator of a nation's health as it show trends in savings, which lead to
investments - ANS -national savings rate
Household savings can be a source of borrowing - ANS -for governments to provide funds for
public works and infrastructure needs
fiscal policy - ANS -Government policy that attempts to manage the economy by controlling
taxing and spending.
monetary policy - ANS -Government policy that attempts to manage the economy by controlling
the money supply and thus interest rates.
Supply-side policies - ANS -economic policies designed to stimulate the economy by increasing
production
expansionary fiscal policy - ANS -An increase in government purchases of goods and services,
a decrease in net taxes, or some combination of the two for the purpose of increasing aggregate
demand and expanding real output
expansionary monetary policy - ANS -monetary policy that increases aggregate demand
consumption - ANS -increases because borrowing is now cheaper, but also because people
need to spend less on things such as mortgage interest payments.
Investment - ANS -increases because the opportunity cost of investment (the return from
sticking the money in a savings account) has fallen.
Net export - ANS -increase because a fall in the interest rate makes holding the domestic
currency less attractive, which causes it to depreciate, making exports cheaper and imports
more expensive.
contractionary fiscal policy - ANS -reduces aggregate demand
contractionary monetary policy - ANS -monetary policy that reduces aggregate demand
unemployment rate - ANS -the percentage of the labor force that is unemployed
Recession - ANS -A slowdown in a nation's economy
price level - ANS -a measure of the average prices of goods and services in the economy
Price levels are expressed in... - ANS -small ranges or as discrete values such as dollar figures
Price levels are leading indicators in the economy; - ANS -rising prices, indicate higher demand
leading to inflation while declining prices indicate lower demand or deflation
In the investment world.... - ANS -price level is referred to as support and resistance, which
help define entry and exit points
monetary policy - ANS -Government policy that attempts to manage the economy by controlling
the money supply and thus interest rates.
Aggregate Demand - ANS -the amount of goods and services in the economy that will be
purchased at all possible price levels
How is CPI used? - ANS -1. as a target policy: to gauge our success in low inflation
-to measure inflationary tendencies
2. to index payments
3. to translate from nominal to real values
Consumer transaction - ANS -A transaction in which an individual incurs an obligation primarily
for personal, family, or household purposes.
economic growth - ANS -the ability of the economy to increase the production of goods and
services
Increases in capital goods, labor force, technology, and human capital - ANS -can all contribute
to economic growth
Economic growth is commonly measured in terms of the increase in aggregated market value of
additional goods and services produced - ANS -using estimates such as GDP
National Savings - ANS -the sum of private savings and the budget balance, is the total amount
of savings generated within the economy
National savings rate is GDP that is... - ANS -saved rather than spent in an economy
, It is calculated as the difference between a nation's income and consumption divided by income
- ANS -National savings rate
The_____ is an indicator of a nation's health as it show trends in savings, which lead to
investments - ANS -national savings rate
Household savings can be a source of borrowing - ANS -for governments to provide funds for
public works and infrastructure needs
fiscal policy - ANS -Government policy that attempts to manage the economy by controlling
taxing and spending.
monetary policy - ANS -Government policy that attempts to manage the economy by controlling
the money supply and thus interest rates.
Supply-side policies - ANS -economic policies designed to stimulate the economy by increasing
production
expansionary fiscal policy - ANS -An increase in government purchases of goods and services,
a decrease in net taxes, or some combination of the two for the purpose of increasing aggregate
demand and expanding real output
expansionary monetary policy - ANS -monetary policy that increases aggregate demand
consumption - ANS -increases because borrowing is now cheaper, but also because people
need to spend less on things such as mortgage interest payments.
Investment - ANS -increases because the opportunity cost of investment (the return from
sticking the money in a savings account) has fallen.
Net export - ANS -increase because a fall in the interest rate makes holding the domestic
currency less attractive, which causes it to depreciate, making exports cheaper and imports
more expensive.
contractionary fiscal policy - ANS -reduces aggregate demand
contractionary monetary policy - ANS -monetary policy that reduces aggregate demand
unemployment rate - ANS -the percentage of the labor force that is unemployed
Recession - ANS -A slowdown in a nation's economy
