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Audti > Economics > Flashcards

Economics Flashcards

1
Q

When the prices of an item increases supply increases- because more sellers are willing to sell.

A

Economics

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2
Q

When supply changes due to something other than price.

A

Economics

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3
Q

Supply increases at each price point

Higher Equilibrium GDP

Number of sellers increases - market can get flooded

Examples: Government subsidies or technology improvements that decrease costs for suppliers

A

Economics

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4
Q

Supply decreases at each price point

Lower Equilibrium GDP

Cost of producing item increases

Examples: Shortage of gold- so less gold watches are made; wars or crises in rice-producing countries means there is less rice on the market

A

Economics

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5
Q

When the prices of an item increases- demand for it decreases.

A

Economics

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6
Q

When demand changes due to something other than price.

A

Economics

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7
Q

When demand increases at each price point

Price of substitutes go up - price of beef rises- so people buy more chicken

Future price increase is expected - War in Middle East- people go out and buy gas

Market expands - i.e. people get new free health care plan- demand at clinic rises

Expansion - more spending increases equilibrium GDP

A

Economics

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8
Q

Demand decreases at each price point.

Price of complement goes up - price of beef goes up- less demand for ketchup

Boycott - Company commits social blunder- consumers boycott

Consumer income rises - Demand for inferior goods drops as people have more money to spend

Consumer tastes change

Contraction - less spending decreases equilibrium GDP

A

Economics

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9
Q

How much you spend when your income increases

Calculate: Change in Spending / Change in Income

A

Economics

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10
Q

How much you save when income increases

Calculate: Change in Savings / Change in Income

Also equals 1 - Marginal Propensity to Consume

A

Economics

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11
Q

(1 / 1-MPC) x Change in Spending

A

Economics

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12
Q

As spending by consumers or the government increases- the demand curve increases (shifts right).

A

Economics

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13
Q

The increase in demand ends up being larger than the amount of additional income spent in the economy due to the multiplier effect.

One consumer spends money- which:
*Increases the income of a business
*Increases the income of a vendor
*Increases income of employees
*Increases tax revenue

A

Economics

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14
Q

% Change in Quantity Demand / % Change in Price

A

Economics

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15
Q

Price increases- Revenue decreases

Price decreases- Revenue increases

A

Economics

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16
Q

Many substitutes (luxury items)
Considered elastic if elasticity is greater than 1
10% drop in demand / 8% increase in price : 1.25 (Elastic)

Price increases- Revenue decreases
Price decreases- Revenue increases

A

Economics

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17
Q

Price increases- Revenue increases

Price decreases- Revenue decreases

A

Economics

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18
Q

Few substitutes (groceries- gasoline)
Considered inelastic if coefficient of elasticity is less than 1
5% drop in demand / 10% increase in price : .5 (inelastic)

Price increases- Revenue increases
Price decreases- Revenue decreases

A

Economics

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19
Q

Total revenue will remain the same if price is increased

Considered unitary if coefficient of elasticity : 1

A

Economics

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20
Q

% Change Quantity Demanded / % Change in Income

Normal goods greater than 1 (demand increases more than income)

Inferior goods less than 1 (demand increases less than income)

A

Economics

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21
Q

Interest rates increase
Reduced demand for loans
Reduced demand for houses- autos- etc.
Value of bonds and fixed income securities decrease
Inferior good demand to increase
Foreign goods more affordable than domestic
Demand for domestic goods decrease

A

Economics

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22
Q

Overall spending increases

Demand increases (shifts right)

Market equilibrium price increases

A

Economics

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23
Q

Overall production costs increase
Supply decreases (shifts left)
Market equilibrium price increases

Note: Demand-Pull and Cost-Push Inflation BOTH result in market equilibrium price to increase

A

Economics

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24
Q

The price where Quantity Supplied : Quantity Demanded

A

Economics

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25
Q

When Marginal Revenue : Marginal Cost

A

Economics

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26
Q

Causes a surplus if above equilibrium price.

A

Economics

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27
Q

The annual value of all goods and services produced domestically at current prices by consumers- businesses- the government- and foreign companies with domestic interests

Included: Foreign company has US Factory

Not included: US company has foreign factory

A

Economics

28
Q

Sole Proprietor and Corp Income
Passive Income
Taxes
Employee Salaries
Foreign Income Adjustments
Depreciation

A

Economics

29
Q

Individual Consumption

Private Investment

Government Purchases

Net Exports

A

Economics

30
Q

Measures goods/services in current prices.

A

Economics

31
Q

Used to convert GDP to Real GDP

A

Economics

32
Q

Nominal GDP / GDP Deflator x 100

A

Economics

33
Q

Like GDP; Swaps foreign production. US Firms overseas are included- Foreign firms domestically are not included

A

Economics

34
Q

Price of goods relative to an earlier period of time- which is the benchmark. Year 1 : 1.0

((CPI Current - CPI Last) / CPI Last) * 100

A

Economics

35
Q

Personal Income - Personal Taxes

A

Economics

36
Q

% Increase in output / % Increase in input

Greater than 1 : Increasing returns to scale

Less than 1 : Decreasing returns to scale

A

Economics

37
Q

When GDP growth is negative for two consecutive quarters.

A

Economics

38
Q

A prolonged- severe recession with high unemployment rates

No requisite period of time for the economy to officially be in a depression

A

Economics

39
Q

Peak (highest)
Recession (decreasing)
Trough (lowest)
Recover (increasing)
Expansion (higher again)

A

Economics

40
Q

Conditions that occur before a recession or before a recovery

Example: Stock Market or New Housing Starts

A

Economics

41
Q

Conditions that occur after a recession or after a recovery

Examples: Prime Interest Rates- Unemployment

A

Economics

42
Q

Conditions that occur during a recession or during a recovery

Example: Manufacturing output

A

Economics

43
Q

Only people looking for jobs

A

Economics

44
Q

GDP doesn’t grow fast enough to employ all people who are looking for work

Example: People are unemployed in 2010 because there aren’t enough jobs available due to the economy

A

Economics

45
Q

People are changing jobs or entering the work force. This is a normal aspect of full employment.

Example: A recent college graduate is looking for a job

A

Economics

46
Q

A worker’s job skills do not match those necessary to get a job so they need education or training

Example: A construction worker wants to work in an office- so they quit their job and get computer training

A

Economics

47
Q

High Unemployment : Low Inflation (Vice Versa)

A

Economics

48
Q

The rate a bank pays to borrow from the Fed.

A

Economics

49
Q

The rate a bank charges their best customers on short-term borrowings.

A

Economics

50
Q

Inflation-adjusted interest rate

A

Economics

51
Q

Rate that uses current prices

A

Economics

52
Q

Rate for a loan with 100% certainty of payback.

Usually results in a lower rate.

US Treasuries are an example.

A

Economics

53
Q

Currency- Coins- and Deposits

A

Economics

54
Q

Highly liquid assets other than currency- coins or deposits

A

Economics

55
Q

Increased spending levels without increased tax revenue.

Lower taxes without decrease in spending

Gamble that the multiplier effect will take over and boost economy

A

Economics

56
Q

By buying and selling the government’s securities.

A

Economics

57
Q

By adjusting the discount rate charged to banks

A

Economics

58
Q

A tax on imported goods

A

Economics

59
Q

A limit on the number of goods that can be imported

A

Economics

60
Q

They are good for domestic producers.

Demand curve shifts right

Fewer substitutes

They can charge higher prices

A

Economics

61
Q

They are bad for foreign producers

Demand curve shifts left

Fewer buyers

They must charge lower prices

A

Economics

62
Q

They are good for foreign consumers

Supply curve shifts right

Goods purchased at lower prices in the foreign markets

A

Economics

63
Q

They are bad for domestic consumers

Supply curve shifts left

Fewer goods bought due to higher prices

A

Economics

64
Q

Explicit (Actual) cost of operating a business

Implicit costs are opportunity costs

A

Economics

65
Q

Revenue - Accounting Cost

A

Economics

66
Q

Explicit + Implicit Cost

A

Economics

67
Q

Revenue - Economic Cost

A

Economics

Audti (17 decks)

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