economy 3

Question 1

Bubbles

Answer 1

a market phenomenon characterized by surges in asset prices to levels significantly above the fundamental value of that asset.

Question 2

CPI

Answer 2

consumer price index (CPI) - a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically.

Question 3

what does real and nominal mean?

Answer 3

real means that prices from the past has been adjusted for inflation. Nominal means a price from the past that hasn’t been adjusted for inflation.

Question 4

campione in english

Answer 4

sample

Question 5

consumer basket

Answer 5

what a person buy in a year

Question 6

Recessionary gap and Inflationary gap

Answer 6

Recessionary gap :a situation where the real GDP is lower than potential GDP at the full employment
Inflationary gap :the amount by which the actual GDP exceeds potential full-employment GDP.

Question 7

Fiscal policy

Answer 7

the way a government adjusts its spending levels and tax rates to monitor and influence a nation’s economy.

Question 8

types of fiscal policy

Answer 8

a. Expansionary Fiscal Policy - stimulates the economy during or anticipation of a business-cycle contraction.
b. Contractionary Fiscal Policy - enacted by a government to reduce the money supply and ultimately the spending in a country.
c. Classical theories assumed that the economy will fix itself in a long run, and that government intervention will, at best, lead to unintended consequences and, at worst, cause massive inflation and debt.

Question 9

Deficit spending -

Answer 9

the government spends more money than it collects in tax revenue.

Question 10

Multiplier effect

Answer 10

the initial increase in government spending of 100$ might turn out to be 175$ worth of actual spending in the economy.

Question 11

Multipler effect’s scenario

Answer 11

a. When the economy is booming, multiplier is close to 1x.
b. When economy is in recession, the multiplier is around 2x.
c. Spending on infrastructure, and aid to state & local governments , also seems to have fairly high multiplier, about 1.5. But general cuts to payroll and income taxes seems to have a multiplier of about 1:. If the government cuts 100$ in taxes, the economy is going to grow by about 100$

Question 12

john keynes

Answer 12

father of macroeconomics

Question 13

austerity

Answer 13

raising taxes and cutting government spending to reduce debt