Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

BEC > Economics > Flashcards

Economics Flashcards

1
Q

Real GDP

A

(Nominal GDP / GDP deflator) * 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Leading Indicators

A

Predict economic activity

Change before the economy follows a trend

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Examples of leading indicators

A

Average new unemployment claims
M2
S&P Stock Index
Orders for goods

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Lagging Indicators

A

Follow economic activity

Change after a given economic trend has already started

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Examples of lagging indicators

A

CPI
Consumer debt to income ratio
Average duration of unemployment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Coincident Indicators

A

Change at approximately the same time as the whole economy

Provides information about the current state of the economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Examples of coincident indicators

A

Industrial production
GDP
Personal income less transfer payments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Long run aggregate supply line

A

Vertical line
Illustrates that in the long run, if all resources are fully utilized, output is determined solely by the factors of production
Correspondences to the potential level of output in the economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Factors that shift aggregate demand

A 
TWICEG
Taxes
Wealth
Interest rate
Consumer confident
Exchange rate increases
Government spending
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Multiplier Effect (definition)

A

Increase in consumer, company or government spending produces a multiplied increase in the level of economic activity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Multiplier equation

A

1 / (1-MPC)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Solve for change in GDP per multiplier effect

A

Multiplier * Change in Government Spending

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Factors that shift aggregate supply

A 
Input prices (wages, supplies)
Supply shocks (plentiful vs curtailed)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

GDP Measurement: Expenditure Approach

A

Government spending
Investment, gross private
Consumption, private
Exports (net), includes foreign

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

GDP Measurement: Income Approach

A 
Income of proprietors
Profit from corporations
Interest (net)
Rental income
Adjustments from net foreign income
Taxes
Employee compensation
Depreciation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Net Domestic Product

A

GDP - depreciation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Gross National Product

A

Includes GDP and goods/services produced abroad by US firms and excludes good/services produced domestically by foreign firms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Net National Product

A

GNP - economic depreciation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

National Income

A

NNP - indirect business taxes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What type of employment rises during a recession and falls during an expansion?

A

Cyclical unemployment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is included in the natural rate of unemployment?

A

Structural, frictional and seasonal unemployment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is full unemployment?

A

When cyclical unemployment does not exist but there is still natural unemployment (structural, frictional and seasonal).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Consumer Price Index

A

Measure of overall cost of a fixed basket of goods and services already paid for

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

CPI Equation

A

(Current cost / Base Cost) * 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Demand Pull Inflation
Shift in aggregate demand to the right | Due to TWICEG
26
Supply Push Inflation
Shift in aggregate supply to the left | Due to inputs and supply shocks
27
M1
Money used for purchasing goods, services No type of savings accounts or CDs
28
M2
M1 plus liquid assets that are easily convertible to checkable deposits or M1 CDs LESS THAN $100k Money market deposit accounts Mutual funds Savings Accounts
29
M3
M2 plus CDs of $100k or more
30
Expansionary monetary policy
Purchase of US Treasury bills, bonds (purchase pours money into economy) Decrease in interest rate Decrease in required reserve ratio
31
What happens as a result of expansionary monetary policy?
Aggregate demand shifts right GDP rises Unemployment falls Price levels rise
32
Contractionary monetary policy
Sale of US Treasury bills Increase in interest rate Increase in required reserve ratio
33
What happens as a result of contractionary monetary policy?
Aggregate demands shifts left GDP falls Unemployment rises Price levels fall
34
What is the result of a change in price relative to the quantity demanded?
Indirect relationship When price increases, quantity demanded decreases This is simply a change in QD along the demand curve
35
What is the result of the change other than price, relative to the quantity demanded?
The demand curve will shift right according to increases the following: ``` Wealth Related good prices Income of the consumer Tastes of the consumer Expectations of the consumer Number of buyers in the market ```
36
Fundamental law of supply
The higher the price one can sell, the more they will produce Positive relationship
37
What is the result of a change in (selling) price relative to the quantity supplied?
When (selling) price increases, the quantity supplied will increase This is simply a change in QS along the supply curve
38
What is the result of a change other than (selling) price, relative to the quantity supplied?
The supply curve will shift according to the following: ``` Expectations of future (selling) price Cost of inputs Other goods' demand Subsidies, taxes Technology in production ```
39
How will the expectation of future selling price effect the supply curve?
If future selling prices will decrease, company will sell more now > supply more now to make more profit
40
How will the cost of inputs effect the supply curve?
If costs are expected to decline, supply will increase (more workers for cheaper)
41
How will the demand of other goods effect the supply curve?
if the demand for other goods falls, a company will focus on producing more of another good to squeeze profit (butter v margarine).
42
How will subsidies effect the supply curve?
If subsidies increase, supply of a good will also increase since the company will receive more support from the government to produce.
43
How will taxes effect the supply curve?
If taxes increase, supply of a good will decrease since this will discourage production.
44
How will technology in production effect the supply curve?
If technology improves, supply will increase as production will be more efficiency (output).
45
Price ceiling
Maximum price set BELOW the equilibrium price | Cause prices to be artificially low, creating greater demand (rent control)
46
Price floor
Minimum price set ABOVE the equilibrium price | Established by law (minimum wage)
47
Price elasticity of demand (definition)
Sensitivity per the percentage change in quantity demanded as a result of the percentage change in the price Ranges from >1, 1 to <1
48
What is meant by a negative price elasticity coefficient for a demand curve?
Since the relationship between demand and price is negative, this is represents a normal demand curve. However, this will always been shown as the absolute value. Positive percentage change / Negative percentage change
49
When there are more substitutes available, what is assumed of demand?
Demand is elastic, consumers will respond to changes in price and will seek out other options as they have them.
50
When there are few to no substitutes available, what is assumed of demand?
Demand is inelastic, consumers will not respond to changes in price and will NOT seek out other options, since they don't have any/have few.
51
Cross Elasticity (definition)
Percentage changes in QD or QS of one good caused by a change in price of another good Ex. butter and margarine
52
Price elasticity of demand (equation)
% change in quantity demanded / % change in price
53
Cross elasticity (equation)
% change in number of units of X demanded or supplied / % change in the price of unit Y
54
What is meant by a positive coefficient as a result of cross elasticity?
Due to the change in price of product Y, the QD or QS has increased. Therefore, the goods are substitute goods.
55
What is meant by a negative coefficient as a result of cross elasticity?
Due to the change in price of product Y, the QD or QS has decreased. Therefore the change in price of product Y has steered away customers; therefore, the goods are complementary goods.
56
Income elasticity of demand (definition)
Percentage changes in QD or QS caused by a change in income
57
Income elasticity of demand (equation)
% change in QD or QS / % change in income
58
What is meant by a positive income elasticity as a result of income elasticity of demand?
As income of the consumer increases, the demand for the good increases. As a result, this is a normal good/luxury good.
59
What is meant by a negative income elasticity as a result of income elasticity of demand?
As income of the consumer increases, the demand of the good decreases. As a result, this is an inferior good.
60
Expansionary fiscal policy
Increased government spending | Decreased taxes
61
Contractionary fiscal policy
Decreased government spending | Increased taxes
62
PEST Analysis
Political, economic, social, technological | Essential to understanding the nature of the operating environment and making entity wide decisions

BEC (9 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions