Studied by 1 personTags & Description
marginal propensity
The ________ to consume (MPC) is the fraction of extra income a household consumes as opposed to saving.
John Maynard Keynes
________ in The General Theory of Employment, Interest, And Money proposed the theory of liquidity preference to explain the factors that determine the interest rate.
money supply
When policymakers change the ________ or tax level, it indirectly influences the aggregate- demand curve shift.
Monetary policy
________ is an important value.
aggregate demand
Crowding- out effect: the offset in ________ that results when expansionary fiscal policy raises the interest rate which leads to less investment spending.
wealth effect
The ________ is the least important reason for the slope downward.
interest rate
A decrease in the ________ reduces the cost of holding money and raises the quantity demanded.
Multiplier
________ effect: the additional shifts in aggregate demand that result when expansionary fiscal policy increases income and thereby increases capital spending.
federal funds rate
The ________ accommodates day- to- day fluctuations.
Fiscal policy
________: the setting of the levels of government spending and taxation by government policymakers Changes in Government Purchases.
higher interest rate
A(n) ________ reduces the quantity of goods and services demanded.
expansionary monetary policy
The liquidity trap states that ________ reduces interest rates and stimulates investment spending.
Automatic tax cuts
________ stimulate aggregate demand and reduce economic fluctuations.
Automatic Stabilizers
________: changes in fiscal policy that stimulate aggregate demand when the economy goes into a recession but that occur without policymakers having to take deliberate action.
investment accelerator
The ________ is the positive feedback from demand to investment.
nominal interest rate
The ________ is usually reported as such, the real interest rate is corrected for inflation.
price level
The ________ is one determinant of the quantity demanded.
Monetary policy
________ can be described either in terms of the money supply or in terms of the interest rate.
Money supply
________ is hard to measure with precision.
aggregate demand
When the Fed increases the money supply, it lowers the interest rate and increases the quantity of goods and services demanded for any given price level, shifting the ________ curve to the right.
aggregate demand
When the market is pessimistic, the Fed can expand the money supply to lower interest rates and expand ________.
Note
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