The level of interest rates in a free market economy are
primarily determined by the rate of inflation, the demand for
money, and the actions of the Federal Reserve. Lenders of money
will generally demand what is known as a nominal interest rate
which is equal to a real interest rate plus a premium to cover the
inflation rate. The real, or inflation adjusted interest rate, is
the percentage rate of return to a lender as measured by an
increase in purchasing power.
Yale professor Irving Fisher's economic theory of interest rates
laid the conceptual groundwork for establishing that the nominal
interest rate equals the real interest rate plus the anticipated
rate of inflation. Fisher's mathematical equations in his theory of
interest rates are supported by empirical data. A comparison of
comparable maturity U.S. Treasury securities, one of which has a
fixed rate and the other an inflation adjusted rate, shows that the
nominal interest rate always exceeds the real interest rate.
A consumer, whether a borrower or a saver, will generally be
quoted a nominal interest rate by a bank on a loan or a savings
account.
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Term1/16
What are expressed powers
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Definition1/16
Expressed powers are powers written down for Congress in the Constitution.
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Term1/16
The federal program created in the 1960s which provides medical care to the poor and indigent who qualify is called
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Definition1/16
The federal program created in the 1960's which provides medical
care to the poor and indigent who qualify is called Medicaid.
Medicaid is a social program that was created in 1965,
🔄 Click to see term
Term1/16
Who runs unemployment insurance programs
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Definition1/16
Each state is responsible for and runs its own unemployment
insurance program.
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Term1/16
Which is the government agency responsible for prohibiting discrimination in the work place
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Definition1/16
Equal Employment Opportunity Commission
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Term1/16
Which of these is centered on aggregate demand
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Definition1/16
Fiscal policy is centered on aggregate demand.
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Term1/16
What happened to social programs in America after World War 2
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Definition1/16
Programs continued to increase,even though the economy was stronger
🔄 Click to see term
Term1/16
Which of these is not a shared goal of both fiscal and monetary policy
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Definition1/16
lowering intrest rates (A+(
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Term1/16
When a city government isn't able to raise enough revenue to pay for a new program or project what does the city do
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Definition1/16
issue bonds which are sold to the public
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Term1/16
Which economic trend might happen as a result of abnormal weather such as drought or flooding
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Definition1/16
It can lead to negative effects on the economic activity and can
even cause a recession.
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Term1/16
What is the goal of government involvement in currency exchange rates
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Definition1/16
Keep it stable
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Term1/16
What defines aggregate demand
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Definition1/16
the total demand for final goods and services in the economy
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Term1/16
The Earned Income Tax Credit is offered at which government level
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Definition1/16
federal
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Term1/16
Which point in the business cycle has the greatest economic activity
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Definition1/16
Peak a+
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Term1/16
A shortage of a natural resource can lead to which phase in the business cycle
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Definition1/16
recession
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Term1/16
Under which circumstances do individuals and couples qualify for earned Income Tax Credit
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Definition1/16
Low income or having dependent children
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Cards in this guide (16)
How are interest rates calculated
Calculating Interest: Principal, Rate and Time are Known--I= p r
t
The level of interest rates in a free market economy are
primarily determined by the rate of inflation, the demand for
money, and the actions of the Federal Reserve. Lenders of money
will generally demand what is known as a nominal interest rate
which is equal to a real interest rate plus a premium to cover the
inflation rate. The real, or inflation adjusted interest rate, is
the percentage rate of return to a lender as measured by an
increase in purchasing power.
Yale professor Irving Fisher's economic theory of interest rates
laid the conceptual groundwork for establishing that the nominal
interest rate equals the real interest rate plus the anticipated
rate of inflation. Fisher's mathematical equations in his theory of
interest rates are supported by empirical data. A comparison of
comparable maturity U.S. Treasury securities, one of which has a
fixed rate and the other an inflation adjusted rate, shows that the
nominal interest rate always exceeds the real interest rate.
A consumer, whether a borrower or a saver, will generally be
quoted a nominal interest rate by a bank on a loan or a savings
account.
What are expressed powers
Expressed powers are powers written down for Congress in the Constitution.
The federal program created in the 1960s which provides medical care to the poor and indigent who qualify is called
The federal program created in the 1960's which provides medical
care to the poor and indigent who qualify is called Medicaid.
Medicaid is a social program that was created in 1965,
Who runs unemployment insurance programs
Each state is responsible for and runs its own unemployment
insurance program.
Which is the government agency responsible for prohibiting discrimination in the work place
Equal Employment Opportunity Commission
Which of these is centered on aggregate demand
Fiscal policy is centered on aggregate demand.
What happened to social programs in America after World War 2
Programs continued to increase,even though the economy was stronger
Which of these is not a shared goal of both fiscal and monetary policy
lowering intrest rates (A+(
When a city government isn't able to raise enough revenue to pay for a new program or project what does the city do
issue bonds which are sold to the public
Which economic trend might happen as a result of abnormal weather such as drought or flooding
It can lead to negative effects on the economic activity and can
even cause a recession.
What is the goal of government involvement in currency exchange rates
Keep it stable
What defines aggregate demand
the total demand for final goods and services in the economy
The Earned Income Tax Credit is offered at which government level
federal
Which point in the business cycle has the greatest economic activity
Peak a+
A shortage of a natural resource can lead to which phase in the business cycle
recession
Under which circumstances do individuals and couples qualify for earned Income Tax Credit