the buying and selling of gov’t securities by the Fed
Efficiency Wage Models
these models hold it is sometimes in the best interest of business firms to pay their employees higher-than-equilibrium wage rates
Recessionary Gap
the condition in which the Real GDP that the economy is producing is less than the Natural Real GDP and the unemployment rate is greater than the natural unemployment rate
Autonomous Consumption
the part of the consumption that is independent of disposable income
Regressive Income Tax
an income tax system in which a person’s tax rate declines as his or her taxable income rises
Marginal Propensity to Consume (MPC)
the ratio of the change in consumption to the change in disposable income
Monetary Policy
changes in the money supply or in the rate of change of the money supply, intended to achieve stated macroeconomic goals
Balance Sheet
a record of the assets and liabilities of a bank
Indirect Finance
funds are loaned and borrowed through a financial intermediary
Time Deposit
an interest-earning deposit w/ a specified maturity date; these deposits are subject to penalties for early withdrawal (withdrawal before maturity date); small-denomination time deposits are less than $100,000
