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My BEC Cards > Economics > Flashcards

Economics Flashcards

1
Q

Gross Domestic Product

Definition

A

The total market value of all final goods and services produced WITHIN the borders of a nation in a particular time period

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2
Q

Real GDP

Definition and Formula

A

Definition: Measure value of all FINAL goods and services in constant prices

Formula:
Real GDP = (Nominal GDP/GDP Deflator) *100

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3
Q

Recession vs Depression

Definitions

A

Recession - two consecutive quarters of falling national output

Depression - very severe recession

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4
Q

Recession

  1. Definition
  2. Outcome
A
  1. A period when real output, as measured by real national income, is decreasing.
  2. Actual real national income falls short potential real national income because some resources are unemployed and the economy operates below capacity
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5
Q

Aggregate Demand & Supply Curves

Diagram

A

See note card for diagram

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6
Q

Recession Caused by Shift in Demand Curve

Diagram

A

See note card for diagram

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7
Q

Recession caused by a Shift in the Supply Curve

Diagram

A

See note card for diagram

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8
Q

Expansionary Fiscal Policy

Diagram

A

See note card for diagram

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9
Q

Contractionary Fiscal Policy

Diagram

A

See note card for diagram

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10
Q

Multiplier Effect

Formula

A

Multiplier = 1/(1-MPC)

Change in real GDP = Multiplier * Change in Spending

MPC + MPS = 1

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11
Q

Measuring GDP: Expenditure Approach

G-I-C-E

A

G - Government purchases of goods and services
I - Gross private domestic investment
C - Personal consumption expenditures
E - Net exports

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12
Q

Measuring GDP: Income Approach

I-P-I-R-A-T-E-D

A 
I - Income of proprietors
P - Profits of corporations
I - Interest (net)
R - Rental Income
A - Adj. for net foreign inc & misc items
T - Taxes (indirect business taxes)
E - Employee compensation (wages)
D - Depreciation
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13
Q

Unemployment Rate

Formula

A

(No. of unemployed/Total labor force) * 100

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14
Q

Types of Unemployment

A
  1. Frictional - individuals are forced or voluntarily change jobs
  2. Structural - due to changes in demand for products or services
  3. Cyclical - caused by condition of real GDP less than potential GDP (recessions)
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15
Q

Consumer Price Index (CPI)

Def. & Formula

A

Definition: Measure of overall cost of a fixed basket of goods and services purchased by average household

Formula:
Change in CPI = Inf. Rate =
[(CY CPI - PY CPI)/PY CPI]*100

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16
Q

Real Interest Rate

Definition & Formula

A

Definition: Nominal interest rate minus inflation rate

Formula:
Real IR = Nominal IR - Inflation Rate

17
Q

Money Supply

A

M1 - Money used for purchases of goods & services - includes coins, currency, CDs
M2 - M1 plus liquid assets easily converted to checkable deposits or other M1
M3 - Includes all M2 as well as time certificates of deposit > $100k

18
Q

Strategic Management - Steps

8 Steps - Know in order

A
  1. Define vision & mission statement
  2. Set goals of the firm
  3. Define objectives
  4. Decide what to measure to take baseline
  5. Strategic Analysis - SW)T
  6. Create the strategic plan
  7. Implement the strategic plan
  8. Evaluate & revise strategic plan
19
Q

Factors that Shift Demand Curves

W-R-I-T-E-N

A 
W - Change in Wealth
R - Change in Price of Related Goods
I - Change in Consumer Income
T - Change in Consumer tastes/preferences
E - Change in customer expectations
N - Change in number of buyers
20
Q

Change in Quantity Demanded

Diagram

A

See note card for diagram

21
Q

Change in Demand

Diagram

A

See note card for diagram

22
Q

Factors that Shift Supply Curves

E-C-O-S-T

A

E - Changes in Price Expectations of supplying firm
C - Changes in Production Costs
O - Changes in Price or Demand for Other Goods
S - Changes in Subsidies or Taxes
T - Changes in Production Technology

23
Q

Change in Quantity Supplied

Diagram

A

See note card for diagram

24
Q

Change in Supply

Diagram

A

See note card for diagram

25
Q

Market Equilibrium

Diagram

A

See note card for diagram

26
Q

Effects of a Change in Demand on Equilibrium

Diagram

A

See note card for diagram

27
Q

Effects of a Change in Supply on Equilibrium

Diagram

A

See note card for diagram

28
Q

Shifts in Demand & Supply

A

See note card

29
Q

Price Ceiling vs Price Floor

Definition

A

Price Ceiling - Maximum price that may be charged for a good
- If ceiling is set below equilibrium price, shortages are caused

Price Floor - Minimum price that may be charged for a good
- If floor is set above equilibrium price, surplus will be caused

30
Q

Demand Elasticity Coefficient

Interpretation

A

ED = Elasticity of Demand

ED>1 Elastic (sensitive to price changes)
ED=1 Unitary (not sensitive or insensitive)
ED<1 Inelastic (not sensitive to price changes)

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