B5-M1 Flashcards
1
Q
Trough
A
- low point of economic activity, no positive indicators for the future
- unused productive capacity & unwillingness to risk investments
2
Q
Increase in aggregate demand causes:
A
- increase in price level
- increase in GDP
3
Q
Recession
A
- negative real economic growth, decline in national output
- potential output> actual output
- Falling GDP: decrease in supply or demand
4
Q
Peak
A
- GDP is @ highest point & unemployment is @ lowest point
- high point of economic activity
5
Q
Expansionary fiscal policy
A
-Increasing government purchases & decreasing taxes
-increase in demand & GDP
-Decrease in unemployment
(Contradictory= increase in taxes)
6
Q
Expansionary monetary policy
A
-increase in money supply
7
Q
Nominal GDP
A
- unadjusted
- measures value of all final goods & services in prices @time of production (in current prices)
8
Q
Real GDP
A
- adjusted
- accounts for changes in price level (removes effects of inflation)
- measures value of final goods & services in constant prices
9
Q
Business Cycle
A
- Expansionary
- Peak
- Contractionary
- Trough
- Recovery
10
Q
Business Cycle
A
- Expansionary
- Peak
- Contractionary
- Trough
- Recovery
- refer to overall economic activity, not just to one firm
- variation attributed to duration and intensity
11
Q
Shift right (increase) in Supply
A
- Output increases, prices fall
- Increase in GDP
12
Q
Increase in wages
A
- decrease in GDP
- increase in prices
13
Q
Increase in wages
A
- decrease in GDP (increase in input costs)
- increase in prices
14
Q
Real GDP per capita
A
- Real GDP divided by population
- used to compare standards of living across countries and time
- adjusts for differences in population
15
Q
Increase in conversion value compared to the dollar
A
- higher exchange rate, lower value
- depreciation of the currency
