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42 Cards in this Set

  • Front
  • Back
3 kinds of policy that the government has used to influence the macroeconomy:
-fiscal policy
-monetary policy
-growth or supply-side policies
definition of fiscal policy:
-government policies concerning taxes and spending
definition of monetary policy:
-the tools used by the federal reserve to control the quanity of money in the economy
definition of growth or supply-side policies:
-government policies that focus on stimulating aggregate supply instead of aggregate demand
3 market arenas:
-goods and services market
-labor market
-money market
definition of goods and services market:
-households and government purchase goods and services from firms
definition of labor market:
-firms and government purchase labor from households
definition of money market(financial market):
-housholds purchase stocks and bonds from firms
2 types of bonds:
-treasury bonds (government)
-corperate bonds (business)
definition of bonds:
-corperate IOU's (certificate of debt offered by government or corperation)
4 categories of expenditure:
-personal consumption expenditures (C)
-gross private domestic investment (I)
-government consumption and gross investment (G)
-net exports (EX - IM)
Expenditure approach formula:
-GDP = C + I + G + (EX - IM)
personal consumption expenditures(C) definition:
-household spending on consumer goods
gross private domestic investment(I) definition:
-spending by firms and households on new capital (plants, equipment, inventory, residential structures, etc.)
3 factors of gross private domestic investment:
-residential investment
-non residential investment
-change in business inventories
government consumption and gross investment(G) definition:
-government spending
net exports(EX - IM) definition:
-net spending by the rest of the world, or exports minus imports
Formula to explain the relationship between total production and total sales:
-GDP = final sales + change in business inventories
definition of inventories:
-the goods that firms produce now but intend to sell later
Formula for calculating capital at the end of a period(inventories):
-capital(end of period) = capital(beginning of period) + net investment
definition of net investment:
-gross investment minus depreciation
definition of depreciation:
-the amount by which an asset's value falls in a given period
definition of assets:
-things a firm owns that are worth something
Income approach formula:
-GDP = national income + depreciation + (indirect taxes - subsidies) + net factor payments to the rest of the world + other
definition of national income:
-the total income earned by the factors of production owned by a country's citizens
5 things that national income is the sum of:
-compensation of employees
-proprietors income
-corperate profits
-net interest
-rental income
defintition of compensation of employees:
-wages salaries, etc... employer contributions to social insureance, pension funds, etc
definition of proprietors income:
-income of unincorperated businesses
definition of corperate profits:
-income of corperate businesses
definition of net interest:
-interest paid by businesses
definition of rental income:
-income recieved by property owners in the form of rent
examples of indirect taxes:
-sales taxes, customs, license fees, etc
definition of subsidies:
-payments made by the government for which it recieves no goods or services in return
definition of net factor payments to the rest of the world:
-payments to the rest of the world minus income from the rest of the world
definition of other in terms of the income formula:
-business transfer payments and statistical discrepancy
labor force formula:
-labor force = employed + unemployed
3 requirements of being employed:
-works for pay for 1 or more hrs per week
-works without pay for 15 or more hrs per week in a family enterprise
-who has a job but has been temporarily absent, with or without pay
definition of unemployed:
-a person 16 yrs or older who is not working, is available for work, and has made specific efforts to find work during the previous 4 weeks
popluation formula:
-population[16yrs+] = labor force + not in labor force
definition of not in the labor force:
-a person who is not looking for work, either because he or she does not want a job or has given up looking
unemployment rate formula:
-unemployment rate = (unemployed) / (employed) + (unemployed)
labor-force participation rate formula:
-labor-force participation rate = (labor force) / (population[16yrs+])