Chapter 1 Flashcards
Define cost
Cost= sacrifices of resources
Define shadow prices
Shadow prices= can make estimated price of a good or service for which no market place exist
What did William Stanley say?
“Let by gone be by gone” – Move on
Who is the Father of Externalities?
Asis Pogu
What are externalities and their characteristics
They are spill over costs, you don’t account for them, and they can be either positive or negative
In benefits we see utility, who is the father of this benefit?
John Stuart Mill. In utility you see satisfaction of what others are doing.
Definition of Federal Funds Rate.
Federal Funds Rate= bank needs to have liquidity
Examples of Federal Funds Rate
Mortgage, student, car, and credit loans.
Define the Fisher Effect
Fisher Effect= counts on the inflation
What are real interest rates?
They are risky and are for people who are impatient and want they’re money now.
Who was Eugene Bombvavert?
Eugene Bombvavert, Austrian economist, had credible theory of interest rates. His theory was the impatience people had over getting something. The effect then was the real interest rate (Fisher Effect).
What was the difference or new foundation Eugene Bombvavert created in affect to the Fisher Effect?
Eugene Bombvavert created the different consumption of having to wait for something that they liked.
Do people regularly opt for future value?
There are some savers that don’t mind having to obtain their money in the future, but the majority wants their money now that is why present value is very important. Different events can change our perspective in the future.
Define consumer price index
Consumer Price Index= is used as an estimate of the general price level of an economy.
What are different ways of measuring the Consumer Price Index? Explain them.
Laspeyres Index-relatively easy to get timely figures
Paasche Index- shows what today’s “basket” would have cost at yesterday’s price
Chained Index-consumers purchasing decisions change along with price changes.
