• Shuffle
Toggle On
Toggle Off
• Alphabetize
Toggle On
Toggle Off
• Front First
Toggle On
Toggle Off
• Both Sides
Toggle On
Toggle Off
• Read
Toggle On
Toggle Off
Reading...
Front

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key

Play button

Play button

Progress

1/45

Click to flip

45 Cards in this Set

• Front
• Back
 CPI (given year) (cost-market basket in given yr) ------------------------------- (cost-market basket in base yr) X 100 Inflation Cpi New yr ----------- Cpi base yr Aggregate demand Y=c+I+G+(E-IM) GDP Y=c+I+G+(E-IM) Or NI= National Income Real Salery Nominal/CPI x 100 Consumption Function C=a+b(DI) MPC Change in consumption / Change in Disposable income DI GDP-taxes + transfer payments Nominal rate of interest Real interest + Expected Inflation Real GDP Nominal GDP / GDP deflater x 100 growth rate of Potential GDP Growth rate of labor force + Growth rate of labor productivity Multiplier (Fixed Taxes) 1 / (1-mpc) total profit total revenue - total cost productivity output / hours worked interest rate change in Price --------------- price money supply M = c+d RESERVE RATIO RESERVES ----------- DEPOSITS Multiplier (variable Taxes) Change in GDP --------------------- change in expenditure Tax Rate Change in taxes ------------------ change in GDP Contractionary fiscal tools (3 main things) -Cutting government spending -raising taxes -reduces inflation Expansionary fiscal policy (4 main things) - increase government spending - decrease taxes - Increase transfer payments - reduces unemployment Required reserves (Loan) x (required reserve rate) Change in money supply (1/reserve ratio) x (change in reserves) reserve ratio reserves --------- deposits Velocity Y x p ----- m Value of transfers (p) m x v ------ y Gdp ( in relation to Money supply) m x v ------ p Money supply ( M1 type) y x p ----- v Changing Velocity formula (bonus #1 exam 2) (%change in v) x (% change in m) = (%change in p) x (% change in y) What happens to unemployment when GDP goes down? unemployment goes up Unemployment rate unemployment ------------ Labor Force total out put (employment) employment x labor productivity real salery nominal salary --------------- cpi x 100 GDP growth rate Growth of population --------------------- Growth of Labor production Economic growth GDP(1+growth rate)^yrs GDP / capita GDP --------- population Growth rate of potential GDP Growth rate of labor input + Growth rate of productivity Real GDP Nominal GDP ------------ GDP Deflater x 100 Real spending nominal spending ---------------- price index x 100 Income Expenditure Graph (2 key points) -Expenditure increases because wealth increases -Expenditure decreases because wealth decreases what happens to wealth when prices goes up wealth goes down Savings (y - t) - c or (DI) - c tax multiplier -b ------- 1-b(1-t) Recessionary gap (3 key points) -producers push wages down -excess supply of workers - AS shifts outword Inflationary gap (2 key points) - workers push wages up - AS shifts inward (As= aggregate supply)