Econ Quiz 1

Front 1

Macroeconomics

Back 1

Study of the behavieo the economy as a whole. Foces that affect firms, consumers, and workers in the aggregarte

Front 2

Microeconomis

Back 2

Studies individual prices, quantieies and the markets.

Front 3

Themes of Macro

Back 3

Short term fluctuations in output, employmnet, finaincial conditions, and the prices that we call business cycles

The longer term trends in output and living standards know as economic growth

Front 4

Objectives/Insturments

Back 4

Output- High level and rapid growth of output.

Employment:
High Level of employemnt with involuntary unemployment/

Stable Prices

Monetery Policy- Buying and selling bonds, regulating financial instiutions

Fiscal Policy- Govermnet expenditures, taxiation

Front 5

GDP

Back 5

Measure of market value of all final goods and serivces produced in the country's boundries.

Measuer of output by summing Consumption, Gross Investment, government purchases of goods and services, and net exports.

GDP= C+I+G+X

Front 6

Nominal vs Real

Back 6

Nominal is acutal market prices real adjust for inflation

Front 7

Econimic Growth

Back 7

When GDP grows

Front 8

Potentail GDP

Back 8

Maxium substaniably level of out put that an economy can produce

Front 9

Output Rises above potential output

Back 9

Inflation

Front 10

Output below potential

Back 10

Unemployment

Front 11

Goals of MacroEconomics Policy

Back 11

A high and growing levof of natioanl output

High Emploment with low unemployment

A stable or gently rising price level

Front 12

Fiscal Policy

Back 12

the use of taxes and goernment expenditures. Long term economic growth

Front 13

Government Expendetures

Back 13

Goverment payroll expenditures on employees + cost of goods it buys from private industry

Transfers - not included in GDP

Front 14

Taxation

Back 14

Affect peoples incomes

Affect prices of goods

Front 15

Monetary policy

Back 15

goenrment control of money, creidt, and banking system.

Short term interst rates, affect spending in business investments, houseing foreghn trade

Front 16

Internacianl Financial Managemt

Back 16

Foriegn exhange rate.

Front 17

Aggergate supply

Back 17

total quanity of good and services that the buiness willing to produce and sell in a given period. Varies on price, costs and levl of economic demnad

Front 18

Aggergerate Demand

Back 18

total amount differnt sectors are willing to spend. Depends on level of prices, moneteray and fiscal policy

Front 19

Compnents of Aggergate Demand

Back 19

Consumption, Government Purhcases, net exports,

Front 20

Macroeconmic Equilbrium

Back 20

combination of overall price and quanity which all buyers ans sellers are satisfied with theur overall purchases, sales, and prices

Front 21

consumer price index

Back 21

fixed basket of consumer goods.

Front 22

Inputs

Back 22

Land Labor Capital

Front 23

Two Measurs of GDP

Back 23

Flow of Products- spending on consumption

Sum of Earnings- Uses Factor Earnings (wages, interest rents, and profits)

(only include final goods)

Front 24

Value Added

Back 24

Avoid double counting by counting only final goods. Pruchases are subtracted p88

AH addition - difference between a firm's sales and its purchases of materials and services from other firms

Front 25

Price of GDP/Deflator of GDP

Back 25

Differnece between real and nominal GDP

Front 26

Nominal GDP vs Real GDP

Back 26

Nominal- uses market pricing

Real- removes price changes and calclatesin terms of quanittes of good and services.

Front 27

Chain Wieghting

Back 27

multiply growth rates for a service or product.

Front 28

Consumption catagories

Back 28

Durable Goods (cars)
NonDurable Goods (food)
Services (medical care)

Front 29

Investment for GDP Purposes

Back 29

buildings, equipment, inventory etc.

Not Stocks, savings account(Finacial Ivnvestments)

Front 30

Net vs Gross Investment

Back 30

Net = -deprecation

Front 31

Government Transfers

Back 31

Socail Secutrity, etc not part of factor payments of GDP or government spending.

Front 32

NDP

Back 32

Net Domestic Product is GDP minus deprecation.

GDP is used becuase estimating depreciaton is hard.

Front 33

GNP

Back 33

Gross Nantional Product
Produced and owned by US residents (Honda, Toyata)

Front 34

NI

Back 34

Natioanl Income- income recieved labor, capital, and land.(-depreciation)

Front 35

DI

Back 35

Disposable Income=
Market and trasfers income - personal taxes

Goes consuption spending and personal savings

Front 36

Omitted Nonmarket Activities

Back 36

Opportunity cost for college. Stay at home mommy.

Also omitted Environmental Damage

Front 37

CPI

Back 37

Consumer Price Index is weighted average of the price of a basket of goods and services. 8 major categories: F&B, Apparel, Transportation, Medical, Recreation, Education. Other G&S

Weighted each price according to economic importance of the commodity in question.

Front 38

PPI

Back 38

Producer Price Index- based on over 8000 wholesale pricing.

Front 39

Personal Savings

Back 39

Income - Personal Spending

Front 40

Personal Savings Rate

Back 40

Personal savings as a % of DI

Front 41

Consumption Function

Back 41

Shows Relationship between the level of consumption expenditures and the level of disposable personal income

Front 42

Break Even Point

Back 42

above the line disavings below savings

Front 43

Savings Function

Back 43

realtionship between the level of savings and income

Front 44

MPC

Back 44

Marginal Comenpsity to Conusme is the extra amount that people consume when they receive and exrta $ of DI.

Slope of Consumption Function measures the change in consuption per dolaar change in DI.

Front 45

MPS

Back 45

Marginal Properstiy to Save- is the fraction of an extra dollar of DI that goes to savings

Front 46

Consumption and Savings behavior are

Back 46

Key Part to understand economic Gorwth and buisness cycles

Front 47

Permanent Income

Back 47

Trend level of income after removing temporary or transient influensec (gains or losses).

Front 48

Life Cycle Hypothesis

Back 48

Assumes that people save to smooth out consupmtion over life.

Front 49

Wealth Effect

Back 49

Same salary differnt savings. Person with higher savings will spend more of their salary on conumption

Front 50

National Accoutns SAvings vs Balance sheet

Back 50

Paper wealth vs. acutal savings

Front 51

Areas Of Government Involvment

Back 51

Fiscal Policy- Govt spending, tax cut/increase

Monetarty Policy- Money Supply, interest Rates, backstop

Incomes Polices-Wage and price controls 9minumu wage)

Regualtion-Air polution econ and socail impacts, FDA
Antitrust-M&A
Trade Policy- Nafata

Front 52

Positve vs Normative

Back 52

Postive- what is
Normative- What might be