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| 13642662952 | Costs of Inflation | 1. Cost in administrative/manual labor and duties to physically make price changes 2. Saved money loses value 3. Shoe leather costs 4. Lenders lose, borrowers gain | 0 | |
| 13642666406 | Fisher's Hypothesis | Nominal Interest Rate = Real Interest Rate + Expected Inflation | 1 | |
| 13642667433 | NAIRU | non-accelerating inflation rate of unemployment: Unemployment rate at which inflation does not change over time | 2 | |
| 13642668645 | CPI formula | Current basket/base basket X 100 |  | 3 |
| 13642669769 | GDP deflator | Nominal GDP/Real GDP x 100 |  | 4 |
| 13642674095 | Factors Shifting Aggregate Supply | Changes in resource availability - Relaxing immigration laws - Discovering new oil fields Changes in productivity - New technologies - Relaxing government regulations Changes in the expected price level (shifts only short-run aggregate supply) - If suppliers expect prices to be lower in the future, they will supply more right now, shifting aggregate supply right. | 5 | |
| 13642677937 | The Wealth Effect | The tendency for people to increase their consumption spending when the value of their financial and real assets rises and to decrease their consumption spending when the value of those assets falls. | 6 | |
| 13642680255 | Interest rate effect | The tendency for increases in the price level to increase the demand for money, raise interest rates, and, as a result, reduce total spending and real output in the economy (and the reverse for price-level decreases). P↑→IR↑→Spending↓→AD↓ | 7 | |
| 13642684272 | Foreign Purchases Effect | when price level falls, other things being equal, US prices will fall relative to foreign prices, which will tend to increase spending on US exports and also decrease import spending in favor of US products that compete with imports. | 8 | |
| 13642687103 | Factors Shifting Aggregate Demand | - Changes in consumer spending - Changes in investment spending - Changes in government spending - Changes in net exports | 9 | |
| 13642688793 | Classical Economic Theory | the predominant paradigm in economic analysis from about 1800 until 1930, based on Say's Law | 10 | |
| 13642689935 | Say's Law | theory that supply creates its own demand | 11 | |
| 13642693832 | Marginal Propensity to Consume (MPC) | the increase in consumer spending when disposable income rises by $1 | 12 | |
| 13642694555 | MPC formula | ∆Spending/∆Disposable Income |  | 13 |
| 13642699124 | Multiplier formula | 1/(1-MPC) |  | 14 |
| 13642699751 | Multiplier | the degree of magnification that an initial change in spending will have on an economy | 15 | |
| 13642703609 | automatic stabilizers | government spending and taxes that automatically increase or decrease along with the business cycle Ex: Taxes and TANF | 16 | |
| 13642705338 | Crowding Out | a decline in private expenditures as a result of an increase in government purchases | 17 | |
| 13642705988 | Phillips Tradeoff | the inverse relationship between inflation and unemployment | 18 | |
| 13642705989 | Phillips Curve | a curve that shows the short-run trade-off between inflation and unemployment |  | 19 |
| 13642711444 | Stagflation | a period of slow economic growth and high unemployment (stagnation) while prices rise (inflation) | 20 | |
| 13642712657 | M1 | A measure of the money supply that includes cash, demand deposits, and traveler's checks | 21 | |
| 13642713090 | M2 | All of M1 + less immediate (liquid) forms of money to include savings, money market mutual funds, and small denomination time deposits. | 22 | |
| 13642713091 | M3 | The broadest component of the money supply. Equal to M2 plus large time deposits. | 23 | |
| 13642714435 | policy tools of the fed*** | reserve requirements, discount rate, open market operations | 24 | |
| 13642715087 | change in money supply | Money Multiplier x Change in Bank Reserves | 25 | |
| 13642715860 | money multiplier | the amount of money the banking system generates with each dollar of reserves | 26 | |
| 13642717513 | Perspectives on the Money Supply*** | 27 | ||
| 13642717799 | Equation of Exchange | M x V = P x Q | 28 |
