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Econ 111-Exam 3 > Econ 111-Exam 3 > Flashcards

Econ 111-Exam 3 Flashcards

1
Q

Who holds the national debt (Who lends to the U.S. Federal Government)?

A

People, institutions, and other countries

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2
Q

What is an IOU?

A

treasury notes, bills, bands

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3
Q

What is the national debt?

A

About 31 trillion

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4
Q

What percentage of who we owe, do we owe to ourselves?

A

71%

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5
Q

Who do we owe?

A
  1. US govt./agencies-29%
  2. Debt held by the public- 42%
  3. Foreign govt./investors- 29%
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6
Q

What is GDP?

A

The total market value of all real final goods and services produced in the U.S. in a year.

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7
Q

When is GDP stats released?

A

Every 3 months

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8
Q

What was the 2021 Nominal GDP?

A

$22.99 Trillion

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9
Q

What does nominal mean?

A

Current GDP in current prices

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10
Q

What is real GDP?

A

GDP that has adjusted for price level changes

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11
Q

What is a price index used for?

A

To convert nominal to real

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12
Q

What is an intermediate good?

A

A good produced for further processing

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13
Q

How much should GDP grow each year?

A

2% to 5%-short run

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14
Q

What is the average GDP growth rate for a long run period?

A

3%

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15
Q

What is a “bad” growth rate?

A

1% to 2%(anemic)

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16
Q

What is a recession?

A

Two consecutive quarters of falling real GDP

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17
Q

What was the official recession date periods?

A

1990, 2001, 2007, 2020

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18
Q

What was the shortest and deepest recession ever?

A

2020

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19
Q

What was the longest expansion of recession in history?

A

2009-2020

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20
Q

What does GDP exclude?

A
  1. Purely Financial Transactions
  2. Secondhand Sales
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21
Q

What is the GDP equation?

A

C+I+G+(Xg-M)

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22
Q

What does the C in the equation stand for?

A

Consumer spending

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23
Q

What does the I in the equation stand for?

A

Investment spending

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24
Q

What does the G in the equation stand for?

A

Government spending

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25
Q

What does the Xg in the equation stand for?

A

Exports

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26
Q

What does the M in the equation stand for?

A

Imports

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27
Q

What is the largest component of total spending?

A

Consumer spending

28
Q

What do households spend on?

A
  1. Durable goods
  2. Non-Durables
  3. Services
29
Q

What are the factors that determine consumption?

A
  1. Income
  2. Prices
  3. Wealth Effects
  4. Credit Condition
  5. Current Household Debt Level
  6. Taxes
  7. Expectations/Uncertainty
30
Q

What does more income mean?

A

More consumption

31
Q

What does more saving mean?

A

Less consumption and less income

32
Q

What is wealth?

A

The value of assets such as stock portfolios and retirement accounts and the value of real assets-your home, & car.

33
Q

What is the best measure of wealth?

A

Net worth

34
Q

What encourages consumer spending regarding credit?

A

Easy credit and low rates

35
Q

What discourages consumer spending regarding credit?

A

Low credit and easy credit

36
Q

If the household debt burden is low, what will households do?

A

Households may borrow to fund consumer expenditures

37
Q

If the household debt burden is high, what will households do?

A

Households may decrease current spending
to pay off past consumer spending

38
Q

What does a tax change cause?

A

Disposable income is increased

39
Q

What will happen if the tax is increased?

A

Decrease in consumer spending

40
Q

What will happen if the tax is decreased?

A

Increase in consumer spending

41
Q

What do businesses spend on?

A
  1. New tools, equipment, machinery, factories
  2. Residential investment
  3. Changes in Inventory
42
Q

What does an increase in inventory do to GDP?

A

Inventory is added to GDP

43
Q

What does a decrease in inventory do to GDP?

A

Inventory is subtracted from GDP

44
Q

Which GDP component fluctuates the most?

A

Investment spending

45
Q

What are the determinants of investment spending?

A
  1. Expectations
  2. Interest Rates
  3. Technology and Innovation
46
Q

What are interest rates?

A

The price you pay to borrow

47
Q

How is government spending determined?

A

Political Arena

48
Q

What is the number one federal outlay?

A

Transfer Payments

49
Q

What is the number one source of federal taxes?

A

Income Taxes

50
Q

What are the state outlays/expenditures?

A
  1. Education
  2. Public Warfare
51
Q

What are the local outlay/expectations?

A
  1. Education
  2. Welfare, Health, Hospitals
52
Q

What are the local tax revenues?

A
  1. Property Taxes
  2. Sales and Excise
53
Q

What does an increase in government spending do to GDP?

A

Increases GDP

54
Q

What does a decrease in government spending do to GDP?

A

Decreases GDP

55
Q

What are exports?

A

Total value of goods & services that we sell to others outside of the U.S.

56
Q

What are imports?

A

Total value of goods & services that we buy from others outside of the U.S.

57
Q

What are net exports(Xn)?

A

The difference between exports and imports

58
Q

What is a trade surplus?

A

Xn is positive

59
Q

What is a trade deficit?

A

Xn is negative

60
Q

What is a tariff?

A

Tax on imports paid by the consumers

61
Q

Where are tariffed goods produced?

A

Internationally

62
Q

Who oversees the tariff code?

A

The U.S. Department of Customs

63
Q

Who buys our stuff?

A
  1. Canada
  2. Mexico
64
Q

Who do we buy stuff from?

A
  1. China
  2. Mexico
65
Q

What are some GDP issues to remember?

A
  1. Non-Market Transactions
  2. Underground Economy
  3. Per Capita Output
66
Q

What is the per capita output equation?

A

GDP/population

67
Q

What does ceteris paribus mean?

A

All things remaining equal are the same

Econ 111-Exam 3 (1 decks)

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