chapter 6

Question 1

keynesian economics theory

Answer 1

economic slumps are caused by inadequate spending and they can be mitigated by givernmental intervention

Question 2

macroeconomics, what is it?

Answer 2

study of the behaviour of the economy as a whole
monetary policies, fiscal policies, business cycles (expansions/recessions, peaks/troughs)
long-run economic growth (GDP, CPI, PPI)
inflation, deflation

Question 3

business cycle

Answer 3

short-run alternation of recessions (falling period) and expansions (rising periods). it has peaks, or troughs. basically if everyone spends there is no problem

Question 4

long-run economic growth

Answer 4

sustained upward trend in the economy’s output overtime
extremely important for the poorer countries

Question 5

inflation, deflation, bubble

Answer 5

inflation is prices going up
bubble is when people borrow too much money and banks give too much credit –> the fall will be harder
deflation when price go down

Question 6

unemployment and recession

Answer 6

unemployement normally preceeds recession, is a fall in employment that causes a deflation and then a recession

Question 7

balance in trade and open economies

Answer 7

trade surplus: more exports than imports
trade decifit: more imports than exports
the balance would be equal of both