Reading...
Play button
Play button
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;
21 Cards in this Set
- Front
- Back
|
How do you know you are in a recession
|
2 consecutive quarters of lower GDP
|
|
|
People who do not count towards unemployment
|
People who aren't looking for a job- people who don't work cuz doing sumn else Ex. Students living off parents
Discouraged workers - someone who gives up looking for job Ex person looking for job but hasn't found one and unemployment $ used up Underemployed - someone who is working below job skill Ex. History graduate working as bartender or waitress Underground worker - those working under table Ex. Drug dealer, Prostitute |
|
|
Types of Unemployment (people who are statistics)
|
Seasonal - Definite begininnning and end point Ex. lifegaurd working ay beach.
Frictional - person just starting loooking for job or in between jobs. Ex stay at home mom putting in resume for job Structural - Technologically Unemployed (job skills no longer needed) Ex Car manufacturer worker who job replaced by robot (technology) Cyclical - Lack of demand, down time in economy Ex. No one buying car during recession car salesman loses job |
|
|
PPI
|
Producer Price Index wholesale good buy in bulk) Ex. Oil prices go down buy anticipating going back up
|
|
|
CPI
|
Consumer Price Index - How gov't measures inflation rate
|
|
|
COLA
|
Cost Of Living Adjustment - Gov't gives adjustment to how CPI rate goes
Ex. CPI goes up so does COLA |
|
|
Resources Cost
|
Important part of supply can go up in price and can affect producer
EX. jet fuel goes really high affects airlines |
|
|
How to protect yourself against resource cost?
|
Go to supplier and agree on long term contract to protect rates.
EX. Southwest airlines went to jet fuel supplier and agreed on long term fixed deal |
|
|
Hyper Inflation
|
Extreme inflation that goes up 100%
Ex. Civil War, 1923 Germany, Hungary |
|
|
Characteristcs of recession
|
1. Demand falls Ex. Housing market goes down
2. Production Falls Ex. Shell Bros stop building homes 3. Employment Falls Ex. Shell bros start laying off workers |
|
|
Choose two assumptions of classical economics and explain how they could be wrong
|
1. People are motivated by self interest - Own interest comes first
Ex. Let person into traffic but wasn't acknowledged for the good jester. 2. People arent fooled by the money illusion - Peopl dont understand the difference between nominal and real Ex. Old person comparing todays prices (nominal) to price when they were younger not taking into account changes in time (real) |
|
|
Name explain give example of two groups not included in unemployment
|
1. Uneremployed - Person working at job below their job skill
Ex. History graduate working as a waiter or bartender 2. Underground worker - Person working under the table Ex. Drug Dealer, Prostitute |
|
|
Name the prevailing economic theories person name, reason exist and main point
|
1.Keynesian John Keynes Great Depression Gov't programs implemented, Fiscal help
2. Monetarist Milton Friedman Stagflation Federal reserve intervenes to keep money at certain % rate (stability) 3. Rational Expectation Robert lucas Internet (allow people to see ahead of time) Gov't gives very little information |
|
|
Explain two main reasons the gov't budget deficit increased during recession?
|
N/A
|
|
|
Explain supply and demand reason for interest rates to increase during inflation
|
1. Demand rises - prices of everything goes up (need more money) Ex. Buy Car The more you want the more its going to go up
2. Supply goes down - Banks don't have much because people arent saving Ex. Blue Crabs |
|
|
What are the two main pt of stagflation and explain those
|
High Inflation, High Unemployment
Inflation Unemployment 1. Oil Crisis minorities - Seeking jobs 2. Vietnam Women - demanding better pay better job 3. Great Depression Disabled - Demanding jobs |
|
|
Inflation Characteristics
|
1. Saving Rate decrease - get now before things go up people spend money because afraid to save.
2. Interest rates increase - Price of money banks have and have to buy from them a. Demand up - Price of everything goes up Ex. Buy Car (more you want more its gonna go up) 2. Supply down - Banks dont have much because people arent saving Ex. Blue Crabs Ways to fight inflation as bad as inflation itself. a. Raise taxes - take money will stop spending b. Wage/Price freeze - nothing goes up or down C. Break up union/corporations- Dont want any monopolies (reduce price) |
|
|
Tragedy of Commons
|
Role of Gov't whereas government has referee.
Ex. Size and limits to catching rock fish or trout there use to be no regulations to how many you caught and their sizes didnt have to be so big but population started to diminish so gov't stepped in and set regulations. |
|
|
Difference between MPC and MPS
|
Marginal Propensity to consume - Percent of dollar you will spend.
Marginal propensity to save - Percent of dollar you will save <The higher the MPC more money we will have>. <The higher the MPS the less money we will have> The more we spend the more money created |
|
|
Money multiplier
|
Create more money in our economy
|
|
|
Velocity of money
|
How fast you can spend money to create more money
Ex. Go to store don't have cash on hand so use debit/credit card to purchase therefore making quick to spend money |
