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30 Cards in this Set
- Front
- Back
What did the crisis in 2008 cause? |
1. output growth rate to decrease |
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The US federal budget surplus or deficit? |
Deficit |
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The Euro Area |
High |
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The Euro Area What was the high unemployment rate caused by? Why is reducing labour market rigidities not an option? |
Tight macroeconomic policy (high cost for firms to fire and hire employees) |
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The Euro Area |
--> lose control over monetary policy |
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China What has rapid growth caused in China? |
1. high output rate |
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China |
Increased investment caused more output |
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China |
- technological progress |
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GDP |
Value of the final goods and services |
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GDP |
Sum of Value Added |
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GDP |
Sum of Incomes |
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Nominal Income ($Y) Defined |
the sum of the quantities of final goods produced at their current price |
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Real GDP (Y) defined |
the sum of quantities of final goods times constant price (base year) |
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Growth Rate defined |
Yt - Yt-1 / Yt- |
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The labour force |
L (labour force) = N (employment) + U (unemployment) |
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The unemployment rate |
u= U (unemployment) / L (labour force)<-- people looking for work or who have work |
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Participation Rate |
L (people looking for work or who have work)/ population of working age (full working population working, not working, given up looking, do not want to work) |
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The GDP Deflator |
Pt= Nominal GDP/ Real GDP ($Yt/Yt) |
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Nominal GDP can be calculated by (using Pt, Yt, inflation rate, growth rate) |
PtYt or inflation rate + growth rate |
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Okun's Law |
that if output growth is high then unemployment will decrease (1% in output will cause 0.4% decrease in unemployment) |
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The Phillips Curve |
the realtionship between inflation and unemployment ( inflation on vertical, unemployment on horizontal, downward sloping) |
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The Short Run Changes because of |
change in demand |
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The Medium Run changes because of |
change in supply |
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The Long Run changes because of |
government actions |
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GDP calculated by |
GDP = C + I + G +NX |
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GNP calculated by |
GNP= GDP + net factor income from abroad |
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Trade Balance |
Exports - Imports |
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Indirect Taxes |
taxes from purchases of goods and services |
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Direct Taxes |
taxes from income |
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Government Primary Deficit |
government expenditure + transfer payments - direct taxes - indirect taxes |