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35 Cards in this Set
- Front
- Back
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Marginal Thinking
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additional cost
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Positive vs. Normative
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Positive - testable
Normative - untestable |
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Change in Resource Prices
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Resource prices up - supply down because less profitable
Resources prices down - supply up |
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Externalities
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Spillover effects that affect a non-party participant(negative=noisy neighbors; positive=planting flowers in neighborhood)
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Middlemen
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People who arrange trade. (ex.pawn shop, eBay)
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Change in Money Supply
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Fed controls. Reserve requirements increase, expand MS. Buy bonds, expand MS. Discount rate up, lower MS
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Lack of Competition
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No competitions, there are fewer alternatives for substitute goods. No competition, firms can maximize prices
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GDP
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Gross Domestic Product.
Only goods in US boundaries Only final goods and services only count goods for current year Y=C+I+G+NX |
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Scarcity
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Lack of resources. Economy is study of scarcity
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Classical View
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Believe in less government intervention. As you get paid more, things cost more. As you get paid less, things cost less. Classical believe in laissez-faire economics. As supply goes up, prices go down and GDP goes down
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Keynes Economics
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Demand creates supply. Keynes agrees that prices can go up but ever go down. Full employment is not norm.
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Crowding Out
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When government starts selling bonds, it takes away from the banks who would get the money from those customers. This "crowds out" the banks
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SRAS,LRAS,AD
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In the long run, profitability remains the same, since prices of goods and prices for labor/production also go up. If AD changes unexpectedly, then SRAS will automatically adjust itself. If AD goes down, SRAS goes up and vice versa
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Price Controls
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Prices floors, and ceilings
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Expenditure Multiplier
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1/1-MPC
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Labor Force Participation Rate
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Number of people who are employed + number who are unemployed / population
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Unemployment Rate
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Number of people who are looking for jobs, are able and willing to work, but cannot find jobs ( #unemployed / # in LF)
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Opportunity Cost
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The next best thing you have to give up
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Annual Inflation Rate
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On average in US, about 3 %
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Business Cycle
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Expansionary(inflation up, unemployment down), Peak(lowest unemployment) Contractionary(unemployment up), Recessionary(unemployment is peaking)
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Association is not Caustation
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Just because you do a routine during a sports game, and they win once, does not mean they will win all the time when you do it
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Appreciation/Depreciation
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Dollar amount changes. When dollar appreciates, imports increase and exports decrease
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Unanticipated inflation
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When inflation is either higher or lower than expected. This changes economy differently than expected inflation
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Real vs. Nominal GDP
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Nominal is money value. Real is money value adjusted for inflation
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Substitue Goods
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other goods that can be used as a replacement
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Types of Unemployment
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Frictional(lack of info)
Structural(economy changes and workers skills are no longer needed) Cyclical(only inefficient, because of recessionary phase of business cycle) |
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PPC
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Production Possibility Curve. Ideal output is located in middle of curve. Outside curve is impossible, inside is inefficient
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Elasticity of Demand
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How flexible prices are. As prices go up, QD rapidly goes down. This product has alot of substitues
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Loanable Funds Market
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Loaners and borrowers market. One of the 4 markets. If you save your money, you are a supplier of loanable funds
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Comparative Advantage
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Whoever has lower opportunity cost for making one particular good/service
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Fractional Reserve Banking
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When you have banking where there is a reserve requirement
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Fiscal Policy
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Taxing and spending of federal governement.
Expansionary = when gov spends more and taxes less Restrictive = taxes up, gov spending down |
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Absolute Advantage
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Who has lowest opportunity cost
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D vs QD
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QD is x axis and D is line itself. Demand changes with price
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S vs QS
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Supply is line itself and QS is x axis. Supply changes as prices go up and down
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