Test#3 Study Guide

The following are a list of topics to study for the test:

• Negative demand shocks
• Positive supply shocks
• Stagflation
• long-run macroeconomic equilibrium
• recessionary gap
• inflationary gap
• Stabilization policy
• Expansionary vs. Contractionary Fiscal Policy
• The government spending multiplier vs. the government transfers/taxes multiplier
• The savings-investment spending identity in a closed economy
• national savings
• The four main types of financial assets
• The narrowest definition of the money supply
• The three main roles that money plays in the economy
• A bank's T-account
• The monetary base vs. the money supply
• The two main parts of the Federal Reserve System
• The Federal Open Market Committee
• The federal funds rate vs. the discount rate
• Open-market operation