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50 Cards in this Set
- Front
- Back
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Credited by many as the founder of classical economics |
ADAM SMITH |
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Believed that the government should intervene in economic events as little as possible |
ADAM SMITH |
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It was the mainstream economics from roughly 1775-1830 |
CLASSICAL SCHOOL OF ECONOMICS |
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The economics bible |
THE WEALTH OF NATIONS |
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The Wealth of nations is a plea for |
NO GOVERNMENT INTERFERENCE |
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The centerpiece of the classical system |
SUPPLIES CREATES ITS OWN DEMAND |
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ASSUMPTIONS OF THE CLASSICAL MODEL |
• PURE COMPETITION • WAGES AND PRICES ARE FLEXIBLE • PEOPLE ARE MOTIVATED BY SELF-INTEREST • PEOPLE CANNOT BE FOOLED BY MONEY ILLUSION |
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No single buyer or seller of a commodity or an input can affect its price |
PURE COMPETITION EXIST |
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The like are free to move to whatever level of supply and demand dictate. Prices rise and fall to an equilibrium |
WAGES AND PRICES ARE FLEXIBLE |
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Business want to maximize their profit and households want to maximize their economic well being |
PEOPLE ARE MOTIVATED BY SELF INTEREST |
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Buyer and Sellers react to changes in relative prices |
PEOPLE CANNOT BE FOOLED BY MONEY ILLUSION |
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The first nation to recover fully from the Great Depression |
SWEDEN |
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Second nation to recover fully from the Great Depression |
GERMANY |
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Third nation to recover fully from the Great Depression |
BRITAIN |
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Landmark work written by John Maynard Keynes |
THE GENERAL THEORY OF EMPLOYMENT, INTEREST AND MONEY |
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Concerns of Macroeconomics |
• INFLATION • OUTPUT GROWTH • UNEMPLOYMENT |
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The sum of consumer spending, investment spending, and government spending |
AGGREGATE DEMAND |
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Function of disposable income |
CONSUMPTION |
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An increase in the overall price level |
INFLATION |
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Instead of growing at an even rate at all times, economies tend to experience short term ups and downs |
OUTPUT GROWTH |
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The main measure of how an economy is doing, the the total quantity of goods and services produced in the economy in a given period |
AGGREGATE OUTPUT |
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Period during which aggregate output declines |
RECESSION |
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a prolonged deep recession becomes ... |
DEPRESSION |
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Is a key indicator of the economy's health |
THE UNEMPLOYMENT RATE |
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GOALS OF MACROECOMICS |
1. A high and growing level of national output 2. High employment 3. A stable or gently rising price level 4. Robust international trade, with a stable foreign exchange rate and exports balancing imports |
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One way the government affects the economy through tax and expenditure decisions |
FISCAL POLICY |
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The government should cut taxes and or raise spending to get the economy out of slump |
EXPANSIONARY FISCAL POLICIES |
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Government should raise taxes and end or cut spending |
CONTRACTIONARY FISCAL POLICY |
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Through this the government can determine the quantity of money in the economy |
NATIONS CENTRAL BANK |
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Refers to the tool used by the Bangko Sentral ng Pilipinas (BSP) to control supply of money |
MONETARY POLICY |
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TOOL OF MONETARY SUPPLY POLICY |
• OPEN MARKET OPERATIONS • THE RESERVE RATIO • THE DISCOUNT RATE |
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Increase in the supply of money to increase aggregate demand by buying securities in the open market, lowering the reserve ratio and the discount rate |
EASY MONEY POLICY OR EXPANSIONARY MP |
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Tightening the supply of money in order to reduce spending and control inflation. This is done by selling securities ,increasing the reserve ratio and raising the discount rate |
TIGHT MONEY POLICY OR RESTRICTIVE MONETARY POLICY |
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Government policies that focus on stimulating aggregate supply instead of aggregate demand |
GROWTH POLICIES |
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Focusing on the tax system, tax reform is to increase the incentive to work, save and invest by lowering taxes |
GROWTH POLICIES |
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A decade of Great Depression |
1930s |
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Stock market crash |
OCTOBER 24 |
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Black Tuesday |
OCTOBER 29 |
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First bank panic |
1930 |
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Second bank panic |
1931 |
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Worst years of Great Depression |
1932 |
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Third bank panic |
1933 |
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Year when Roosevelt declare bank Holiday |
1933 |
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Year of Swedens Recovery |
1934 |
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Year when baking act was implemented |
1935 |
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Year of Germanys Recovey |
1936 |
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Year of Britain Recovery |
1938 |
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Depression ending worldwide as nations prepare for the coming hostilities |
1939 |
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Key indicator of economics health |
UNEMPLOYMENT RATE-THE PERCENTAGE OF LABOR FORCE UNEMPLOYED |
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WHAT ARE THE BANKING ACT OF 1935 |
• Emergency Relief Appropriation Acts • National Labor Relations Act • Social Security Act |
