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25 Cards in this Set
- Front
- Back
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a trade deficit exists when
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imports exceed exports
opposite is a trade surplus |
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economic growth is measured
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with increases in REAL GDP
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how can growth be shown graphically?
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by a rightward shift in LAS the long run aggregate supply, or
an outward shift in the PPF, production possibility frontier. |
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sources of growth are synonmous with which words when answering a growth question
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Increased, (investment, human capitol, education, training, Investment)
Improvment in: technology, resources Enhanced utilization for:....resources, productivitity |
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when the deficit is NEG. the debt does what?
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Decreases.
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when the dollar depreciates (looses value)
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there is an INCREASE in exports
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the short-run phillips curve indicates
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the inverse relationship between.
Unemployment and Inflation. |
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when inflation is High
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unemployment is low
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phillips curve corresponds to or explains unemployment at what kind of unemployment?
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the Natural Rate of unemployment
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the phillips curve shows natural unemployment and natural unemployment show what kind of unemployment
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structural and frictional
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what is structual and frictional unemployment
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structural = unemp. due to Skill mismatch
(S for Skill for Structural) Frictional = unemp. due to moving or lack of experience. cyclical = unemp. due to depression or recession. Due to the business cycle. |
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Monitarists stand for what?
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raising/lowering money supply brings econ stability.
disagree with fiscal policy |
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classical economists believe
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people will anticipate govt. policy and it will have no effect.
Volosity of money important increase in money supply = effect on total spending |
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Keynesian economists
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concerned with stagflation
recommend govt. policy. money supply has little effect on economy. |
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stagflation is:
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combo of high prices and falling output
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fiscal and monitary policy can be used in
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tandum
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fiscal policy is be used as a
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contractoinal or expansionary
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explain a common expansionary fiscal policy
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boost output, increase interest rates,
"crowd out" Private Investment. (less capitol investment) |
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explain a common expansionary Monetary policy
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will increase money supply and decrease interest rates
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a bank uses a balance sheet for accounting practices. This kind of accounting sheet is called?
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a T-account
assets on the left liabilities on the right. |
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"Fiat" money
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paper money, it has no real intrinsic value, it just stands for a medium of exchange.
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supply - side fiscal policy
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lower taxes/income rates = more investment and increased incentive
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on the price level/Real GDP chart
name some reasons for an AD shift to the right. for reasons other then a change in price level |
consumption increases:
expectations of shortages or inflation, increased wealth, new jobs, investment increases: due to interest rates dropping, net exports increase. = exchange rates decrease, exports increase. Govt. increases spending, increases money supply, exchange rates lower. |
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foreign trade effect
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when price level in one country increases, imports from others become less pricey
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interest rate effect on price level
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when price level increases:
quantity of money decrea., increased demand for money such as: loans. decrease in the supply of loans. to reach equalibrim= interest must increase |
