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ECON 101 > Chapters 1-5 review > Flashcards

Chapters 1-5 review Flashcards

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1
Q

improvement in technology will?

A

Increase supply, reduce production costs

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2
Q

Opportunity Cost

A

change of output of one good changes, change of another output changes

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3
Q

price of a good decreases from $12 to $10

A

substitution effect more people want to buy the good

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4
Q

Relative price of good

A

ratio of its money price of the next best alternative price

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5
Q

Comparative Advantage

A

who can produce product at a lower cost ( whos faster)

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6
Q

quantity demanded

A

the amount of a good consumers plan to purchase of a particular price

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7
Q

Law of demand states what

A

Other things remain the same, higher price of good= smaller quantity demanded

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8
Q

if X shifts leftward

A

price increase, increase cost of machinery

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9
Q

GDP

A

Gross domestic Product ( all produced through the year)

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10
Q

Nominal GDP

A

Measures GDP using current prices

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11
Q

Real GDP

A

Measures GDP valued using prices prevailing during base year

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12
Q

Potential GDP

A

Measures non inflationary maximum sustainable level of production

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13
Q

Demand increases , Supply no change

A

Price and quantity increases

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14
Q

Demand decrease , Supply no change

A

price and quantity decrease

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15
Q

Decrease supply? no change demand

A

price increase, quantity decrease

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16
Q

Increase Demand and Supply

A

Price change intermediate, Quantity increase

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17
Q

Decrease Demand and Supply

A

Price intermediate, Quantity decrease

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18
Q

Relative Price of a good

A

ratio of its money price of the next best alternative good

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19
Q

Microeconomics

A

study of choices of individuals and businesses make, interact with markets, influence government.

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20
Q

Income effect

A

price of good increases, everything else constant, reduced amount we purchase.

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21
Q

Auto workers negotiate wage increase , how does this effect the supply of cars

A

decreases supply of cars

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21
Q

Law of supply and demand

A

price of any good adjusts to bring the quantity supplied and quantity demanded.

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22
Q

Any price above Equilibrium

A

there is a surplus and price falls

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23
Q

Final goods and services

A

value of the most all imputs used to produce those goods

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24
Q

Market value

A

defined using market prices , enables adding value of diverse set of outputs

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25
Q

increase of price of related good will?

A

decrease supply of another good , produce more quantity

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26
Q

Negative state of nature

A

decrease supply , increase production costs

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27
Q

positive state of nature

A

increase supply, decrease production costs

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28
Q

Law of demand

A

price increase , quantity demand decrease

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29
Q

Absolute Advantage

A

produce more then other producers. ( doesnt consider opportunity cost

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30
Q

Supply increase, no change in demand

A

price decreases, quantity increases

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31
Q

Increase Demand, Decrease Supply

A

Price increase, Quantity change intermediate

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32
Q

Decrease Demand, Increase Supply

A

Price falls, Quantity change intermediate

33
Q

Macro economics

A

study of national and global economics

34
Q

Positive economics

A

testable, confronted with data

35
Q

Globalization

A

increasing flows of capital, goods, and services internationally

36
Q

Trade off choices

A

choice of purchases of something reduces about to do or purchase

37
Q

Marginal cost

A

the cost of producing one or more unit of a good measured in units of the other good

38
Q

Marginal Benefit

A

measured by the amount some one is willing to pay

39
Q

Diminishing Marginal benefit

A

Consumption increases, marginal benefit decreases

40
Q

Substitution effect

A

price of a good increases, everything else constant, opportunity cost increases , leads consumers to substitute goods

41
Q

Quantity Demand

A

amount of good consumers plan to purchase a specific price during a given time period

42
Q

Complements

A

if one is used in conjunction of another

43
Q

Substitutes

A

One good is substituted or used in place of another.

44
Q

capital

A

anything that improves labor productivity , capital earn interest

45
Q

when a price of a good falls the substitution effect leads to_______ in quantity purchased and the income effect leads to__________ in the quantity purchased

A

Increase, decrease

46
Q

Law of Supply

A

other things equal the quantity supplied of a good rises when price of good rises

47
Q

Any price below Equilibrium

A

shortage = price rises

48
Q

Lost incomes

A

those unemployed have reduced incomes

49
Q

Lost human capital

A

longer person is unemployed, more difficult it is to compete for new position

50
Q

People in Labor force

A

population umployed-emplyed

51
Q

Employment to population ratio

A

Employment to population ratio

52
Q

Labor force participation rate

A

labor force/working age population x 100

53
Q

Marginally attracted workers

A

people who are not working but want to

54
Q

Frictional unemployment

A

normal market turnover, some industries either contract or expand, workers look for a better position.

55
Q

Structural unemployment

A

changes in tech and foreign competition that change skills needed or location of jobs

56
Q

Cyclical Unemployment

A

result from expansions and contractions through business cycle, increases during recessions, decreases during expansions

57
Q

natural rate of unemployment

A

the normal rate of unemployment, consisting of frictional unemployment and structural unemployment

58
Q

calculate output GAP

A

Actual GDP-Potential GDP

59
Q

If the unemployment rate is higher than the natural rate then

A

the output will be below potential GDP

60
Q

if unemployment rate is below natural rate then

A

output will exceed potential GDP

61
Q

Price Level

A

Average level of prices

62
Q

Inflation

A

persistent increase in price level

63
Q

Deflation

A

persistent decrease in price level

64
Q

Redistributes Income

A

between employees and employers

65
Q

If inflation is higher then expected then

A

employers are generally better, employees are worse

66
Q

Redistribute wealth

A

between borrowers and lenders

67
Q

if inflation is higher then expected loans will be what

A

repaid

68
Q

CPI

A

Consumer Price Index - measures the average prices paid by urban consumers

69
Q

Inflation Calculation

A

CPI current year - CPI present year X 100

70
Q

when price level is rising quickly

A

inflations rising

71
Q

when price level is rising slow

A

Inflations lost

72
Q

When price level is falling

A

deflation biases CPI

73
Q

Why does quality change

A

Increase in price

74
Q

What is difficult about tracking new goods

A

tracking prices

75
Q

Chained CPI

A

uses current or prior period quantities of goods and services to account for substitution effect and new goods.

76
Q

Personal consumption expenditure

A

relys on broader market basket consumed

77
Q

GDP deflator

A

on relies on final goods and services produced in the economy

78
Q

Headline Inflation

A
79
Q

Core Inflation

A

calculated without food or fuel prices

80
Q

Outlet Substitution Bias

A

As the structure of retailing changes, people switch to buying from cheaper sources, but the CPI, as measured, does not take account of this outlet substitution

ECON 101 (2 decks)

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