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;
100 Cards in this Set
- Front
- Back
|
measures how much of something there is at a given time |
stock variable |
|
|
measures how much something changes over time |
flow variable |
|
|
the amount a recent college grad pays each month in student loan payments stock or flow |
flow |
|
|
the amount a recent college grad owes in student loans stock or flow |
stock |
|
|
the value of your car stock or flow |
stock |
|
|
the amount by which your car decreases in value each year stock or flow |
flow |
|
|
the number of candaian immigrants living in the US stock or flow |
stock |
|
|
the number of canadians who emigrate to the US each year stock or flow |
flow |
|
|
how do you calculate the percentage change in aggregate output from 1990-1991 |
change in GDP from 1990-1991/(level of gdp in 1990) |
|
|
how is a contraction represented on a graph plotting aggregate output |
level of aggregate output slopes downward |
|
|
how is a contraction represented on a graph plotting annual change in aggregate output percentage |
plots for aggregate output during contraction are below zero or negative |
|
|
is the region you call the contraction approximate or exact |
approximate because you don't know when the growth rate turned negative |
|
|
data on recent interest rates that can be a good indicator of whether the economy was recently in a recession not a good indicator of whether economy will be or soon will be in a recession |
lagging economic indicator |
|
|
data on stock market prices which can be a good indicator of whether the economy will likely be in a recession soon not a good indicator of whether economy is currently or was in a recession |
leading economic indicator |
|
|
useful simplification of the macroeconomy used to explain short run fluctuations in economic activity around its long run trend |
Aggregate demand aggregate supply curve |
|
|
what does the horizontal axis of the aggregate demand and aggregate supply curve measure |
an economy's aggregate output or quantity of a product |
|
|
what does the vertical axis of the aggregate demand and aggregate supply curve measure |
the price level |
|
|
why does the short run aggregate supply curve slope upward |
as the price level rises firms expand their production because they can sell their output for money |
|
|
a curve that represents the total quantity of goods and services supplied by domestic suppliers as a function of price level |
aggregate supply curve |
|
|
when a firm response to an increase in price of computers by buying fewer computers is the change captured in aggregate demand or aggregate supply curve |
aggregate demand curve |
|
|
what is the focus of macroeconomics shaped by |
major events in economic history |
|
|
what is the focus of macroeconomic policy shaped by |
government legislative responses to these major events |
|
|
prior to the great depression what did economists believe the economy was |
self regulating |
|
|
true or false prior to the collapse economists believed that markets needed to be free of government interference to operate effectively |
true |
|
|
true or false grim business expectations during 1929 and 1933 negatively affected the aggregate supply |
true |
|
|
in the 1980s what was on of the strategies to fight stagflation and what was the result of this |
lower tax rates to increase aggregate supply thereby increasing output and employment |
|
|
During the great depression prices plummeted as unemployment skyrocketed and factories lay idle show if and how this shifts AD and AS curves |
AD shifts left along supply curve sinking incomes and poor macroeconomic policy caused households and firms ti buy fewer goods and services at any price level |
|
|
what do economists assume that a firm and entrepreneur's decisions are made in an attempt to |
maximize profits |
|
|
what do economists assume households make decisions in an attempt to |
maximize utility |
|
|
given to people that have few resources that are valued in the market due to either disability discrimination or poor health |
short term public assistance |
|
|
short term public assistance such as welfare benefits social securtiy unemployment compensation and disability benefits, food health care, and housign |
transfer payments |
|
|
order the largest sources of personal income in the US |
transfer payments, personal interest, and proprietor's income |
|
|
how do economists look at any situation |
by its comparative parts |
|
|
what are the comparative parts of an economy |
the people making decisions, the environment in which they're making those decisions, and the goods or services being exchanged |
|
|
activities surrounding a family automobile. which of the following car related items are services choose all that apply a) windshield wiper blades b) getting a tire rotation c) receiving an oil change d) an air freshener for your vehicle |
b and c because services are acts that consumers pay for |
|
|
Sole Proprietorships, Partnerships and Corporations which is the most sheer in numbers? which is the most important in total sales |
a) proprietorships, partnerships, corporations b) corporations bring in the most sales
3/4 of firms are sole proprietorships
|
|
|
allows firms to produce many goods and services at lower production and transaction costs than individuals can |
specialization |
|
|
why do households still produce some goods and services for themselves |
households can minimize transaction costs by producing some goods and services for themselves production of some goods and services doesn't require special skills or resources do it yourself job is tax free no income tax technological advances have increased household productivity thereby reducing cost of cooking cleaning and doing chores |
|
|
what is the primary function of government being served when the government levies a tax on consumers and businesses to pay for the provision of a public good such as national defense |
reallocating resources |
|
|
what is the primary function of government that is being served when members of the federal reserve bank the central bank of the us meet every six weeks to adjust interest rates according to economic issues |
promoting stability |
|
|
how does the government make goods available for producing public |
levying taxes on households and businesses; taking income and purchasing power away; reducing private demand enables government to shift new resources to production of public goods |
|
|
how does the government promote stability in the economy |
adjusts interest rates which is a form of monetary policy. interest rates affect consumption and investment which affect unemployment and infaltion |
|
|
when does a situation not involve externalities |
actions neither impose costs nor generate benefits or a third party |
|
|
progressive income tax |
high income tax payers pay a larger fraction of their income than lower income tax payers |
|
|
regressive |
high income taxparyers pay a smaller fraction of taxes than lower income taxpayers |
|
|
proportion |
average tax rate is the same reguardless of of taxable income |
|
|
deficit |
exports<imports |
|
|
stuff |
|
|
formula for net exports of goods and services |
= Exports - imports |
|
|
expenditure approach |
the method of calculating GDP which involves summing the amount spent on final goods and services |
|
|
income approach |
calculating GDP aggregates the income generated by production by summarizing the value added at each stage of production |
|
|
The contribution that you found using hte expenditure approach corresponds to the _______ at each stage of production |
value added |
|
|
list aggregate expenditures |
consumption, net exports, government purchases, investment |
|
|
list aggregate income |
Disposable income, net taxes |
|
|
while aggregate income must equal aggregate expenditure, income must also equal expenditure for each of the five sectors of the circular flow model: households, firms, governments, financial markets, and the rest of the world. In the financial sector, the amount flowing into the sector or ________ must equal the amount flowing out of the sector _____________ |
saving investment plus government borrowing |
|
|
what are the injections of spending |
exports investment and government purcahses |
|
|
what are the leakages |
saving net taxes and imports |
|
|
what does GDP not account for |
household production, enjoyment households receive from things such as quality of goods avaliable to consumers, loss of enjoyment people experience when scenic land is converted into commercial use |
|
|
where are funds spent by city government to renovate their building accounted for in GDP? |
injections from the government into the ecnomy |
|
|
what are the value of the foreighn components of American goods accounted for in GDP as |
part of imports |
|
|
why do price indexes overstate inflation |
They assume fixed basket cost and dont account for a price increase decreasing demand They assume quality of a good doesn't change they dont account for the benefit of new goodsT |
|
|
The GDP price index for this year is calculated by dividing ______________using ___________ by ___________ using ____________ and multiplying by 100 |
THe value of all goods and services produced in the economy this year this years prices the value of all goods and services produced in the economy this year the base year's prices |
|
|
the chain weighted system for measuring inflation helps to reduce the biased caused by _________ and ______________that causes fixed weight measures to ________________ inflation |
changes in product quality consumers switching to lower priced goods overstate |
|
|
what is the GDP formula for the expenditure approach |
Consumption + gross investment+ Government purchases + (exports - imports) |
|
|
what is the GDP formula for the income approach |
depreciation + production taxes + employee compensation + proprietor s income + Corporate Profits + net interest + Rental Income |
|
|
what is the national income formula |
GDP - Depreciation = Net Domestic Product + Net earnings of resources abroad = National Income |
|
|
What is the disposable income formula |
National income + Income received but not earned - income earned but not received = personal income - personal taxes and nontax charges = disposable income |
|
|
employed |
civilian noninstitutionalized adult population who worked for pay in the last week even if unsatisfied with his or her job |
|
|
labor force |
actively seeking employment or employed, and of the adult age |
|
|
unemployed |
part of civilian noninstitutionalized adult population, hasn't worked for pay in previous week and is actively looking for a job |
|
|
formula for labor force participation rate |
number in labor force / civilian noninstitutionalized adult population |
|
|
what is the unemployment rate rate |
number of unemployed workers / number in labor force |
|
|
as a broad measure of how the overall economy is doing the national unemployment rate works fairly well. As we would expect it tends to _________ during period when the US economy is in a recession and __________ during expansions |
increase decrease |
|
|
unemployment rates can differ widely across regions and across different groups of people. For example in the past few decades, the jobless rate among teenagers had tended to be _________ than the jobless rate among adults |
higher |
|
|
when the economy is in a long recession the unemployment rate may _________ as these workers become discourage and leave the labor force |
decrease
|
|
|
structural unemployement |
occurs due to changes in the skills desired by employers or the tastes of customers, for example skills are no longer applicable in job market; job transferred to another firm |
|
|
frictional unemployment |
occurs because job seekers and employers need time to find one another; brief; moved and looking for job |
|
|
cyclical unemployment |
associated with business cycles; rises during recessions and falls during expanisions |
|
|
seasonal unemployment |
joblessness that occurs because some jobs are seasonal, farmland jobs during harvest seasonsw |
|
|
when is the economy at full employment |
when the cyclical unemployment = 0 |
|
|
what is the formula for total unemployment |
seasonal unemployment + frictional unemployment + cyclical unemployment + structural unemployment |
|
|
define a discouraged worker |
not in the labor force, given up looking for work |
|
|
does the unemployment rate change when workers hours are cut |
no it doesn't affect the unemployment rate because the same amount of workers are working |
|
|
hyperinflation |
very high rate of inflation such as the one germany experienced in the 1920s |
|
|
government votes wages must be doubled so firms lay of thousands of workers and charge higher prices. what curves are shifted aggregate demand or aggregate supply to display primary cause of inflation |
aggregate supply is shifted to the left |
|
|
cost push inflation |
type of inflation accompanied by a decrease in aggregate output AD curve doesn't shift caused by a decrease in aggregate supply which is caused by an increase in costs scarcity occurs as a result of this and then households also tend to purchase fewer goods and services. therefore prices increase and aggregate output decerases the higher cost of labor causes a left shift of AS curve raising prices and lowering output |
|
|
demand pull inflation |
inflation caused by an increase in aggregate demand AS curve doesn't shift; higher demand creates scarcity which drives up prices; firms respond by producing more goods and services. therefore both prices and aggregate output increase |
|
|
if inflation turns out to he higher than expected this would __________ the union and __________ specific automakers |
harm benefit |
|
|
what is the formula for real wage increase |
nominal wage increase - inflation that actually occurs |
|
|
if the inflation rate turned out to be lower than expected this would ___________ the union and _________ specific automakers |
benefit harm |
|
|
because of uncertainty about future inflation the union devotes a large quantity of resources to monitoring inflation indicators in order to maximize its financial position. this illustrates the fact that |
variable inflation is associated with high transaction costs |
|
|
what is the formula for real interest rates |
nominal interest rate - inflation rate |
|
|
why does the creditor or loaner benefit from low rate of inflation |
she ends up receiving a payment that is a larger percentage of her salary than she expected |
|
|
why does the debtor suffer from the unanticipated decrease in the inflation rate |
he ends up having to use a larger fraction of his salary to repay the loan |
|
|
which role of government the government decides that it will cut taxes in an attempt to lead the economy out of a serious recession |
promoting stabilityt |
|
|
Which role of government members of the federal reserve bank, the central band of the US meet every six weeks to adjust interest rates according to economic situations |
promoting stability |
|
|
when a firm responds to an increase in the price of computers does the shift the aggregate demand or aggregate supply curve |
it shifts the aggregate demand curve because investment decisions are part of aggregate demand |
|
|
True or false grim business expectations during 1929 and 1933 negatively affected aggregate supply |
true |
|
|
in the 1980s, on of the strategies to fight stagflation was to __________ tax rates to _________ aggregate supply, thereby __________ output and employment |
lower increase increasing |
|
|
stagflation |
persistent high inflation combined with high unemployment and stagnant demand in a country's economy |
