1- What happens if you count both final and intermediate goods? 2- What is count
ID: 1243791 • Letter: 1
Question
1- What happens if you count both final and intermediate goods? 2- What is counted in the expenditure approach ? 3- What is the largest component in the expenditure approach ? 4- What things are included in the government sector ? 5- What is included in investment ? 6- What is the difference between GNP and NNP ? 7- What is GDP ? 8- What is included in the financial accounts in international trade ? 9- A change in foreign reserves shows up in which account ? 10- How do we get the PPI? 11- Be able to interpret a GNP deflator from one year to the next ? 12- How often is GDP data published ? 13- Do current price indexes overstate or understate inflation ? 14- What were wildcat bankers ? 15- How many fed banks are there ? 16- What is fractional reserve banking ? 17- Which part of the fed buys and sells U.S. govt securities ? 18- In what year was the fed founded ? 19- What is the discount rate ? 20- How to banks create money ? 21- How many people are on the board of governors ? 22- What are open market operations ? 23- If the fed buys a security what happens to the money supply ? 24- What is meant by fiat money ? 25- Define fiscal policy ? 26- What defines a bank ? 27- What do we mean by the term fed ? 28- Define checking deposits ? 29- Define originate to hold banking ? 30- Define credit risk ? 31- Define market risk ? 32- Define liquidity risk ? 33- Define originate to distribute ? 34- Define securitization ? 35- What is fannie mae ? 36- What is a credit default swap? 37- What are subprime loans ? 38- Who is the lender of last resort for banks? 39 Define TARP? 40 How did the financial crisis of 2008 happen ? 41 Define saving account ? 42 What is the equation of exchange ? 43 If the money supply rises , what must happen to GNP under the equation of exchange ? 44 What is the most important form of money in the U.S. ? 45 What is the most important instrument of monetary policy? 46 Define federal funds rate ? 47 What causes increases in bank reserves ? 48 What is the least used instrument of monetary policy ? 49 What is the newest instrument of monetary policy ? 50 What are the basic functions of money ?Explanation / Answer
An intermediate good is any thing produced that is not going to be sold directly to consumers. A final good is sold directly to consumers (households) as a final product (Buzz Lightyear toys would be a final product but the plastic and dye for the plastic would be intermediate goods).
1. a statistical discrepancy.
2. the capital consumption allowance
3. the difference between government spending and transfer payments.
4. the difference between the value of exports and the value of imports.
5. the amount that inventory increases every year.
Depreciation = GNP - NNP.
It is not 1. because statistic discrepancy = GDP - GDI.
Could be 2. since capital consumption allowance is defined as the percentage of GDP which is due to depreciation.
It is not 3. because net tax = government spending - transfer payments.
Not 4. because Net exports = X - M.
Not sure about 5.
14.What were wildcat bankers?
Back in the early 19th century, all banks in the United States (with the exception of the First National and Second National Banks) were State Chartered Banks. Out on the Frontier States, some of these banks were called "Wildcat Banks." Wildcat bankers were men of unscrupulous means who would obtain a State Bank Charter, issue notes and spend them, and then do everything possible to keep from having to redeem them. Sometimes they would hide out in small unheard of towns at the edge of the frontier with the wild animals, hence the name "wildcat" bank. Usually, these bankers did not last long and were merely annoyances to the rest of the sound bankers.
Wildcat banking refers to the unusual practices of banks chartered under state law during the periods of non-federally regulated state banking between 1816 and 1863 in the United States, also known as the Free Banking Era. This era, commonly described as an example of free banking, was not a period of true free banking, as banks were only free of federal regulation, and banking was still left to the states to regulate. The actual regulation of banking during this period varied from state to state.
46 Define federal funds rate ?
The interest rate that the borrowing bank pays to the lending bank to borrow the funds is negotiated between the two banks, and the weighted average of this rate across all such transactions is the federal funds effective rate.
48 What is the least used instrument of monetary policy ?
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability.[1][2] The official goals usually include relatively stable prices and low unemployment. Monetary theory provides insight into how to craft optimal monetary policy. It is referred to as either being expansionary or contractionary, where an expansionary policy increases the total supply of money in the economy more rapidly than usual, and contractionary policy expands the money supply more slowly than usual or even shrinks it. Expansionary policy is traditionally used to try to combat unemployment in a recession by lowering interest rates in the hope that easy credit will entice businesses into expanding. Contractionary policy is intended to slow inflation in hopes of avoiding the resulting distortions and deterioration of asset values.
50 What are the basic functions of money ?
Money is often defined in terms of the three functions or services that it provides. Money serves as a medium of exchange, as a store of value, and as a unit of account.
Medium of exchange. Money's most important function is as a medium of exchange to facilitate transactions. Without money, all transactions would have to be conducted by barter, which involves direct exchange of one good or service for another.
The difficulty with a barter system is that in order to obtain a particular good or service from a supplier, one has to possess a good or service of equal value, which the supplier also desires. In other words, in a barter system, exchange can take place only if there is a double coincidence of wants between two transacting parties.
The likelihood of a double coincidence of wants, however, is small and makes the exchange of goods and services rather difficult.
Money effectively eliminates the double coincidence of wants problem by serving as a medium of exchange that is accepted in all transactions, by all parties, regardless of whether they desire each others' goods and services.
Store of value.
In order to be a medium of exchange, money must hold its value over time; that is, it must be a store of value. If money could not be stored for some period of time and still remain valuable in exchange, it would not solve the double coincidence of wants problem and therefore would not be adopted as a medium of exchange.
As a store of value, money is not unique; many other stores of value exist, such as land, works of art, and even baseball cards and stamps. Money may not even be the best store of value because it depreciates with inflation. However, money is more liquid than most other stores of value because as a medium of exchange, it is readily accepted everywhere. Furthermore, money is an easily transported store of value that is available in a number of convenient denominations.
Unit of account.
Money also functions as a unit of account, providing a common measure of the value of goods and services being exchanged. Knowing the value or price of a good, in terms of money, enables both the supplier and the purchaser of the good to make decisions about how much of the good to supply and how much of the good to purchase.
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