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Claritas 2015 > Chapter 5: Macroeconomics > Flashcards

Chapter 5: Macroeconomics Flashcards

0
Q

What is total value of all final goods and services produced within a country over some period of time?

A

GDP

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1
Q

What is study of economy as a whole?

A

Macroeconomics

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2
Q

What are two ways GDP can be calculated?

A

Expenditure approach and income approach

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3
Q

What is formula for GDP?

A

C+I+G+(X - M)

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4
Q

What is largest component of total expenditures?

A

Personal consumption expenditures or household spending, up to 70% of output

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5
Q

What is difference between nominal and real GDP?

A

Nominal reflects current market value of goods and services, unadjusted for price changes. Real is nominal GDP adjusted for changes in price levels and reflects changes in actual physical output

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6
Q

What is measured by percentage change in real output (usually total real GDP) for a country?

A

Economic growth

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7
Q

What is growth of GDP determined by?

A

Growth of labour force and productivity gains which represent growth in output per unit of labour

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8
Q

What are economy wide fluctuations in economic activity?

A

Business cycles

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9
Q

What is general rise in prices for goods and services?

A

Inflation

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10
Q

What marks end of contraction phase and beginning of recovery back to expansion?

A

Trough

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11
Q

What reports the output produced by industrial sector of economy, namely output produced by manufacturing, mining and utilities companies?

A

Industrial production

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12
Q

What signals a change in economic activity after output has already changed?

A

Lagging indicators

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13
Q

What is example of lagging indicator?

A

Employment rate

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14
Q

What reveals current economic conditions but do not have predictive value?

A

Coincident indicators

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15
Q

What is example of coincident indicator?

A

Industrial production and personal income statistics

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16
Q

What usually signal changes in economy in the future?

A

Leading indicators

17
Q

What is example of leading indicator?

A

Interest rate spread, money supply and broad stock indices

18
Q

Which view that if supply of money is large, more funds chase number of goods and push prices higher, leading to inflation?

A

Monetarist view

19
Q

Which view is that inflation is driven by costs of production?

A

Resource slack view

20
Q

What is constructed by determining weight or relative importance of each good and service in a typical households spending, referred to as basket of goods, in a particular base year and then measuring overall price change from year to year?

A

Consumer price index

21
Q

What measures average selling price of goods in economy received by producers?

A

Producer price index

22
Q

What excludes the effects of temporary volatility in commodity including food and energy prices?

A

Core inflation

23
Q

What is defined as current dollar GDP divided by constant dollar GDP?

A

Implicit GDP deflator

24
Q

What is a persistent and pronounced decrease in prices across most goods and services in an economy?

A

Deflation

25
Q

What is little or no economic growth paired with inflation?

A

Stagflation

26
Q

What involves price increases so large that people find it difficult to purchase goods and services?

A

Hyperinflation

27
Q

Does inflation tend to benefit borrowers or lenders?

A

Borrowers

28
Q

Which camp believes that fiscal policy can have powerful effects on aggregate demand, output and employment when there is substantial spare capacity in an economy?

A

Keynesians

29
Q

Which camp believes that fiscal policy has only a temporary effect on aggregate demand and that monetary policy is a more effective tool for affecting economic activity?

A

Monetarists

30
Q

What refers to central bank activities that are directed toward influencing money supply and credit in an economy?

A

Monetary policy

31
Q

What involves the purchase and sad of government notes and bonds?

A

Open market operations

32
Q

What are three tools for monetary policy?

A

Open market operations
Changes in official interest rate
Changes in reserve requirements for commercial banks

33
Q

What is proportion of deposits that must be held by a bank rather than be lent to borrowers?

A

Reserve requirement

34
Q

What is a situation which interest rates cannot be reduced any further to stimulate demand?

A

Liquidity trap where short term interest rate is zero

35
Q

What involves the use of government spending and tax policies to influence level of aggregate demand in an economy and this the level of economic activity?

A

Fiscal policy

36
Q

What is length of time required before policy makers realize that a problem exists?

A

Recognition lag

37
Q

What is length of time between problem recognition and implementation?

A

Action lag

38
Q

What is time required before policy changes begin to have an effect on economic growth?

A

Impact lag

39
Q

What happens when government borrows from limited pool of savings and competes with private sector for funds?

A

Crowding out

Claritas 2015 (6 decks)

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