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AP Macroeconomics > Ch 25 26 28 29 30 > Flashcards

Ch 25 26 28 29 30 Flashcards

1
Q

The knowledge and skills workers acquire through education training and experience

A

Human capital

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2
Q

The inputs into production that nature provides ie land and mineral deposits

A

Natural resources

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3
Q

Society’s understanding of the best ways to produce goods and services

A

Technological knowledge

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4
Q

As physical capital rises the extra output from an additional unit of physical capital falls

A

Diminishing returns

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5
Q

The property whereby poor countries tend to grow more rapidly than rich ones

A

Catch up effect

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6
Q

A capital investment ie a factory that is owned and operated by a foreign entity

A

Foreign direct investment

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7
Q

A capital investment financed with foreign money but operated by domestic residents

A

Foreign portfolio investment

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8
Q

Aim to raise living standards by a sounding interaction with other countries.
Ex: tariff

A

Inward oriented policies

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9
Q

Promote integration with the world economy

A

Outward oriented policies

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10
Q

Ways that population affects living standards

A

Stretching natural resources, diluting the capital stock, and promoting technological progress

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11
Q

The group of institutions that helps match the saving of one person with the investment of another

A

Financial systems

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12
Q

Institutions through which savers can directly provide funds to borrowers

A

Financial markets

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13
Q

A certificate of indebtedness

A

Bond

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14
Q

A claim to partial ownership in a firm

A

Stock

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15
Q

Institutions through which savers can indirectly provide funds to borrowers

A

Financial intermediaries

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16
Q

Institutions that sell shares to the public and use the proceeds to buy portfolios of stocks and bonds

A

Mutual funds

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17
Q

Tax revenue less government spending

A

Public saving

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18
Q

An excess of tax revenue over government spending

A

Budget surplus

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19
Q

A shortfall of tax revenue from government spending

A

Budget deficit

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20
Q

National savings

A

Supply

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21
Q

Demand

A

Investment

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22
Q

Increase in budget deficit causes fall in investment, gov borrows leaving less funds avail ale for investment

A

Crowding out

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23
Q

Paid employees, self employed and unpaid workers in a family business

A

Employed

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24
Q

People not working who have looked for work during previous four weeks

A

Unemployed

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25
Q

The total number of workers including employed and unemployed

A

Labor force

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26
Q

The normal rate of unemployment around which the actual employment rate fluctuates

A

Natural rate of unemployment

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27
Q

The deviations of unemployment from its natural rate, associated with business cycles

A

Cyclical unemployment

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28
Q

Occurs when workers spend time searching for the jobs that best suit their skills and tastes. Short term for most

A

Frictional unemployment

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29
Q

Occurs when there are fewer jobs than workers

A

Structural unemployment

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30
Q

Process of matching workers with appropriate jobs

A

Job search

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31
Q

Changes in the composition of demand across industries or regions of the country

A

Sectoral shifts

32
Q

Provide info about job vacancies to speed up the matching of worker with jobs

A

Gov employment agencies

33
Q

Aim to equip workers displaced from declining industries with the skills needed in growing industries

A

Public training programs

34
Q

A gov program that partially protects workers incomes when they become unemployed

A

Unemployment insurance

35
Q

A worker association that bargains with employers over wages benefits and working conditions

A

Union

36
Q

Firms voluntarily play above equilibrium wages to boost worker productivity

A

Efficiency wages

37
Q

Natural rate of unemployment consists of

A

Frictional unemployment and structural unemployment

38
Q

The stock of equipment and structures used to produce goods and services

A

Physical capital

39
Q

The market in which those who want to save supply funds and those who want to borrow invest funds

A

Market for loanable funds

40
Q

The process by which unions and firms agree on the terms of employment

A

Collective bargaining

41
Q

The exchange of one good or service for another

A

Barter

42
Q

Unlikely occurrence that two people each have a good the other wants

A

Double coincidence of wants

43
Q

An item buyers give to sellers when they want to purchase goods and services

A

Medium of exchange

44
Q

The yardstick people use to post prices and record debs

A

Unit of account

45
Q

An item people can use to transfer purchasing power from the present to the future

A

Store of value

46
Q

Takes the form of a commodity with intrinsic value

A

Commodity money

47
Q

Money without intrinsic money used as money because of gov decree

A

Fiat money

48
Q

Balances in bank accounts that depositors can access on demand by writing a check

A

Demand deposits (part of money supply)

49
Q

An institution that oversees banking system and regulates money supply

A

Central bank, fed reserve of US

50
Q

Banks keep a fraction of deposits as reserves and use the rest to make loans

A

Fractional reserve banking system

51
Q

Regulations on the minimum amount of reserves that banks must hold against deposits

A

Reserve Requirments

52
Q

Fraction of deposits held as reserves, total reserves as percentage of total deposits

A

Reserve ratio

53
Q

The amount of money each banking system generates with each dollar of reserves

A

Money multiplier

54
Q

Reserves and loans, securities

A

Assets

55
Q

Deposits funds from debt and equity

A

Liabilities

56
Q

The resources a bank obtains by issuing equity to its owners

A

Bank capital

57
Q

Use of borrowed funds to supplement existing funds for investment purposes

A

Leverage

58
Q

Ratio of assets to bank capital

A

Leverage ratio

59
Q

A gov regulation that specifies a min amount of capital intended to ensure banks will be able to pay off depositors and debts

A

Capital requirement

60
Q

Banks with too little capital

A

Credit crunch

61
Q

The purchase and sale of US gov bonds by the fed

A

Open market operations (buy increase sell decrease money supply)

62
Q

Interest rate on loans Fed makes to banks

A

Discount rate

63
Q

Interest rate on loan from bank to bank

A

Federal funds rate

64
Q

Measured in monetary units

A

Nominal variables

65
Q

Measured in physical units

A

Real variables

66
Q

Price of one good relative to another

A

Relative price

67
Q

Theoretical separation of nominal and real variables

A

Classical dichotomy

68
Q

Proposition that changes in the money supply do not affect real variables

A

Monetary neutrality

69
Q

Rate at which money changes hands

A

Velocity of money

70
Q

Printing money causes inflation, which is like a tax on everyone who holds money

A

Inflation tax

71
Q

Fisher effect

A

Nominal interest rate=inflation rate +real interest rate

72
Q

The resources wasted when inflation encourages people to reduce their money holdings

A

Shoeleather costs

73
Q

The costs of changing prices

A

Menu costs

74
Q

Inflation changes the yardstick we use to measure transactions
Complicated long range planning and comparison of dollar amounts over time

A

Confusion and inconvenience

75
Q

Firms don’t all raise prices at same time so relative prices can vary which distorts allocation of resources

A

Misallocation from relative price variability

76
Q

Inflation makes nominal income grow faster than real income, taxes based on nominal

A

Tax distortion

77
Q

Higher than expected inflation power from creditors to debtors, relay with dollars worth less and vice versa

A

Arbitrary redistribution a of wealth

AP Macroeconomics (4 decks)

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