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by: Miss Kariane McCullough

PrinciplesofEconomics EC202

Miss Kariane McCullough
CSU Pomona
GPA 3.74


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Class Notes
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This 4 page Class Notes was uploaded by Miss Kariane McCullough on Saturday October 3, 2015. The Class Notes belongs to EC202 at California State Polytechnic University taught by JonathanKinnick in Fall. Since its upload, it has received 20 views. For similar materials see /class/218366/ec202-california-state-polytechnic-university in Economcs at California State Polytechnic University.

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Date Created: 10/03/15
Final Study Guide FED Open market sale Contractionary monetary policy Money supple goes down interest rate r goes up investment goes down Expenditure CIGNX goes down GDP goes down Open market purchase Expansionary monetary policy money supply g CBS 11 interest rate r goes down discount rate interest rate FED sets for loans to banks federal funds rate interest rate for bank to bank loans Effects of an OpenMarket Purchase of Securitie urr Banks Banks and the Fed Federal Reserve Sysrerrr Assels Liulrililles Assels Liulriliiies Reserves 7 SLnCl mllllDll US government securltles 100 mllllon Addendum Changes In Reserves 0 ual reserves 100 mllllOl l equ lre reserves No Change xcess reserves 100 million US government SECUI lIlBS 100 million Banks ger reserves Fed gels securities Bank reslrrvus 4 100 rmlllon Balance Sheetchanges fur nurruwlllg nun me Fed Banks Federal Reserve Sysrem Assels Llrrlrlliries Assels linlrililles Reserves 4 5 Illllllol l Loan from Loan to Banlr V Fed 39l39 5 mllllon bank 5 million reserves l 5 rrrlllrur Addendum Changes Bank rmrmws 5 millron in Reserves and Actual lire nrocecds a e arcdried reserves 5 mrllron lo r15 rusclve accounl Requlred reserves No Change xces reserves 1 5 million Equ2tlanfur AD CoIoGoNX MPC emqm Dll39l39erence between nztlaml 1nd dlspaszble mmme erhamemme befureux E rDlspaszble mcum ehhmshlp betwe en dsp aszble mmme cansumptzan 1nd szvmgs A Consumpllun mum in came smalm c Raul Dlsyluuhl Inc7mg or L2 quesuans guph al39cansumphmfunmm shu39t armavement ang7 rpnce level wealth lnterestntes 1nd future expeaedmcumes 2 cause shll39ts ranly z d39ung m D causes zmnvemznt ung Efl en afprlce level uncansumphmfunmm rpnce level guesup mnsumptmn gaes dawn rpn levelguesdawncansumphmgaesup Equlbrlum Gm amp lnventarle s hvw mventmes mm ll get m equdlbnum MP c glven l md ml tlpller cwen 45 d2 ye hm augum lnventanes 1nd e qulllbrlum any recessmzry gzp Flndthemultlpllen mm agrzph ulcuhte MPC mm amp secandrwund ellens given table with output consumption investment and net export find equilibrium inventories when out of equilibrium when out of GDP inventories are either in surplus or shortage 45 degree line identify in ationary gap why the oversimplified multiplier is incorrect know the few reasons it ignore variable imports which reduce the size of the multiplier it ignores price level changes which reduce the multiplier it ignores income taxes which also reduce the multiplier ASAD diagram shift something What kind of recession reduces in ation Caused by AD or AS shift Effect of a supply shock leftward shift of the supply curve given 4 ad as graphs which one is an autonomous increase in consumption same 4 graphs 2 things change shift the curve 4 AD AS graphs shift supply amp demand know both axis of AS AD diagram price level amp real GDP something that shifts the supply curve how do taxes affect expenditure curve Multiplier under variable taxes 2 questions fiscal policy correcting for gaps what s the effect of fiscal policy on equilibrium Fiscal policy Expenditure diagram how to correct a gap how to eliminate an in ationary gap negative effects of contractionary fiscal policy compare self correcting mechanism to active fiscal policy fiscal policy and size of government you want to do expansionary policy but no government increase Cut taxes YCI c DIYT Solve for Y Fiat money M1 money Excess reserves safety vs profit Given reserve ratio state required amp excess reserves How checking account show up on banks balance sheet asset Liability Banks creating money Given total amount figure out reserve ratio FED expanding money supply discount window reserve ratio etc Given FED balance sheet state open market purchase or sale Effect of that purchase or salequotquot Effect on excess and required reservesquotquot given 4 graphs ofmoney supply and demand effects ofpolicy change federal funds rate ax1s Effect 0f Tbills 0n the price of Tbills Order 0f fed salepurchase how monetary policy affects GDP M0ney supply interest rate investment expenditure GDP


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