Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
76 Cards in this Set
- Front
- Back
|
Economic Problem |
Scarcity, Resources are scarce |
|
|
Opportunity Cost |
if you don one thing, you can't do another |
|
|
Macroeconomics |
Deals with national economy |
|
|
Microeconomics |
Deals with individual |
|
|
Positive economics |
"what is" |
|
|
Negative economics |
"what aught to be" |
|
|
Fallacy of Composition |
Just because it works at individual (micro) doesn't mean it works at national level (macro |
|
|
Fallacy of Division |
Just because it works at national level (macro) doesn't mean it works at individual (micro) |
|
|
Cross-Section |
Takes place at a point in time |
|
|
Secular |
Takes place over time |
|
|
Equality theory of justice |
income received should equal contribution made |
|
|
Factors of Production and their returns |
Land -> rent Capital -> interest Management -> Profit Technology (ghost) |
|
|
what is the FOP - land |
natural resource base, all deposits on the land |
|
|
what is the FOP - labor |
Is embodied in all humans |
|
|
what is the FOP capital |
consumer goods vs capital goods |
|
|
What is money? |
a rationing coupon |
|
|
What is the FOP management? |
responsible for organizing FOP in the most efficient way |
|
|
what is the FOP technology |
ghost, intangable, more output without much input. technology increases return to everything, but doesn't have its own return |
|
|
Goals of economic system |
1.) growth of GDP 4.) equitable distribution of income 5.) economic security 6.) democratic free enterprise - ideology |
|
|
what is the invisible hand |
By Adam Smith, productive, Iraqi vs. americans in the road example |
|
|
What way is the law of supply shown in the graph |
\ |
|
|
What was is the law of demand shown in the graph |
/ |
|
|
what is the law of supply |
price and quantity supplied are closely related. producers give you more of a product at a higher cost than lower prices |
|
|
what is the law of demand |
price and quantity demanded are inversely related people will buy more of a product at a lower price than at a higher price |
|
|
What is equilibrium |
where market is equal. supply and demand are ok. markets always search for this. |
|
|
what are the 3 economic questions? |
what is going to be produced? (goods market tells us this) how? market decides, factor market for whom? both markets (good and factor) |
|
|
what is the factor market |
determines your ability to pay, income |
|
|
what is the goods market |
what we want, desire |
|
|
what is the phillips curve? |
consumer vs capital goods produced |
|
|
when a point is outside of the phillips curve? |
impossible and cannot be done, not enough resources |
|
|
when a point is inside the phillips curve? |
resources aren't being used to their best efficency |
|
|
When an economy only decides to produce consumer goods |
3rd world countries. Economy stays the same each year with the same resource base |
|
|
doing points inside or outside of the phillips curve results in? |
unemployment of resources, resources sitting idle. using resources inefficiently |
|
|
why is the phillips curve bowed? |
reflect law of increasing costs |
|
|
roundabout production |
producing some capital goods and some consumer goods. |
|
|
moving right with the phillips curve |
more consumer, less capital, economy will grow slower |
|
|
moving left with phillips curve |
more capital, less consumer, economy will grow faster |
|
|
what is a consumer good |
pizza, end within itself, utility is derived from consumer goods |
|
|
what is a capital good |
forklift, any good which is going to be used farther in the production process. utility is derived indirectly fro capital goods |
|
|
what is says law |
supply creates its own demand |
|
|
what is classical theory |
1.) savings is a function of interest rate (s=f(i) 2.) investment is the function of interest rate (I=f(i)) 3.) markets in equilibrium 4.) wages, prices, interest rates are flexible and set by the market. 5.) says law must be valid 6.) limited state |
|
|
Keynesian Theory |
1.) savings is a function of income (s=s(y) 2.) investment of expected return (I=s(expected return)) 3.) not necessarily equilibrium *equilibrium is not sufficient 5.) GDP depends on whats being demanded C+I+G+Xn |
|
|
What is stagflation |
simultaneous high rates of unemployment and inflation |
|
|
what is a surplus on a S+D graph |
On the top half |
|
|
what is a shortage on a S+D graph |
on the bottom half |
|
|
what is GDP |
Gross domestic product value of all the stuff we produced this year 1.) standard of living 2.) jobs 3.) price stability |
|
|
what is the multiplier principle |
k= 1/1-MPC or 1/MPS |
|
|
what is the paradox of thrift |
the road to prosperity is paved with debt, if you want to save more, spend more |
|
|
phases of the business cycle |
recovery, peak/prosperity, recession, trough, depression |
|
|
what is a recovery |
GDP^, unemployment down, aggregate spending ^
2 consecutive quarters of this |
|
|
what is a recession |
GDP drops, unemployment ^, aggregate spending down
2 consecutive quarters |
|
|
types of unemployment |
cyclical frictional structural |
|
|
what is cyclical unemployment |
keynsian seen in recession, government can help at this point ag demand and spending are down what causes unemployment is unefficient demand |
|
|
what is frictional unemployment |
voluntary, transitional
move job because someone gives you a better offer |
|
|
what is structural unemployment |
obsolescents people who cant find a job because they lack necessary skills, trading, and education to get a job |
|
|
Types of inflation |
demand pull push (2) cost push and profit push structural inflation hyper inflation creeping inflation |
|
|
What is demand pull inflation |
keynsian aggregate demanding is too high too few dollars chasing too few goods |
|
|
what is cost push inflation |
result of production costs rising faster than productivity |
|
|
what is profit push inflation |
sometimes possible to increase profits by increasing profits |
|
|
what is structural inflation |
economy is tightly interwoven that a price increase in one industry can rapidly spread to the rest |
|
|
what is hyper inflation |
rapid increase in price level with no corresponding increase in the level of output |
|
|
what is creeping inflation |
slow gradual increase in prices over time. |
|
|
how do you calculate APC |
C/y |
|
|
how do you calculate APS |
S/y |
|
|
how do you calculate MPC |
change in C over change in y |
|
|
how do you calculate MPS |
change in S over change in Y |
|
|
what does APC+APS = |
1 |
|
|
what does y = |
C+S |
|
|
what does MPC+MPS = |
1 |
|
|
what is APC? |
c/y average propencity to consume teh percent of national income which is spent |
|
|
what is APS |
s/y average propensity to save percent of national income that is saved |
|
|
what is MPC |
change in c over change in y marginal propensity to consume percent of change of any national income which is spent |
|
|
what is MPS |
change in s over change in y marginal propensity to save percent of change of any national income which is saved |
|
|
what is MPC and MPS |
slope |
|
|
what graph does MPC slope? |
consumption graph |
|
|
what graph does MPS slope |
savings graph |
