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Math > Economy > Flashcards

Economy Flashcards

1
Q

What is Macroeconomics?

A

Macroeconomics is the study of an entire economy of a country (or other form of spending government)

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2
Q

What does GDP stand for?

A

Gross Domestic Product

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3
Q

What is GDP?

A

GDP is the value in money of all of the goods produced and traded annually

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4
Q

What type of production doesn’t count on GDP?

A

things not included in GDP is:
~producing for oneself
~ Illegal production
~ trading of already accounted for items

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5
Q

Why is GDP measured in the money value of the product?

A

to avoid confusing a country that produces as much low value items being as wealthy as a country that produces the same amount of high value items

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6
Q

What is directly correlated to the fall of unemployment

A

when GDP is raising, unemployment is falling

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7
Q

The formulae for unemployment rate is?

A 
100(U/L) = unemployment rate
U= unemployed people*
L = employed people
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8
Q

What kind of people that don’t have jobs don’t count towards negative unemployment?

A

~frictional unemployed people

~structional unemployed people

~People who refuse to work

~People who can’t work (old people, children)

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9
Q

What type of unemployment is threatening?

A

~Cyclical: due to recession

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10
Q

What is the goal of economists when it comes to unemployment?

A

to keep cyclical unemployment as low as possible

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11
Q

what is frictional unemployment?

A

unemployed people who are imbetween jobs

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12
Q

What is structional unemployment?

A

people who are unemployed because their profession has been replaced by machines or became irrelevant.

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13
Q

What is cynical unemployment?

A

unemployed people that are actively looking for a job but cannot get/find one

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14
Q

What did Adam Smith conclude improve a nations wealth?

A

division of labor

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15
Q

Who would Adam Smith provide we should create a pizza?

A

~One prepares ingredients
~another puts it in the oven
~another one puts it in the box.

This division makes each worker more productive, since each one is focused on a thing they do best and they don’t need to spend time switching between the tasks.

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16
Q

What gets rid of self-sufficiency?

A

specializations:

the giving of much more specific tasks to one worker to produce more

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17
Q

If you are good at producing one particular item, how would you get ahold of other items you would need for a finished product?

A

specialize at your craft and then trade with others.

if you make A’s for a company that make’s ABCD’s, you could also give A’ s to the company that makes ASDF’s

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18
Q

What is a market?

A

Anyplace where buyers and sellers meet to exchange goods and services

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19
Q

If too much of a product is being generated-

A

sellers will sell them off at a lower price, giving produce less

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20
Q

If too little of a product is being generated-

A

sellers will sell them off at a higher price, giving producers incentive to produce more

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21
Q

what are price signals?

A

the information that markets generate that guide the distribution of resorces

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22
Q

what is the Y-axis in supply and demand?

A

price per product

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23
Q

what is the X-axis in supply and demand?

A

amount of product

24
Q

supply curve slopes positively or negatively?

A

possitively

25
demand curve slopes positively or negatively?
neggatively
26
if the price is high-
-producers will produce more, buyers will buy less
27
what is is called when the price is high so producers will produce more but buyers will buy less
a surplus
28
if the price is low-
-buyers will buy more, producers will produce less
29
what is it called when the price is low so buyers will buy more but producers will produce less
a shortage
30
what is an equilibrium price?
the price that meets the amount buyers would be satisfied spending and producers would be satisfied earning
31
quantity supplied=quantity demanded is?
equilibrium price
32
equilibrium price is?
the price at which the quantity of a product offered is equal to the quantity of the product in demand
33
equilibrium quantity is?
The quantity demanded or supplied at the equilibrium price
34
What has to be calculated to not confuse a country with an other wise larger GDP than another country which is noticeably richer
calculate GDP Per Capita so even if a country with a large population produces more, it is still poorer
35
What is GDP Per Capita
GDP / population
36
If inflation goes down:
- Everyone essentially gets a raise | - More things can be produced and traded
37
If inflation goes up:
everyone essentially gets a cut in wages | -less things produced and traded
38
What is inflation?
An increase in a currency supply relative to the number of people using it, resulting in rising prices of goods and services over time
39
what are bubbles?
A market phenomenon characterized by surges in asset prices to levels significantly above the fundamental value of that asset
40
When adjusting for inflation, economists pick out a list of:
goods representing what an average consumer buys in a year called a CONSUMER BASKET
41
How to adjust for inflation
create a consumer basket for this year and the next couple of years. Then take a base year (any year you want). Divide the basket cost of each year by the base year and times by a hundred. creating a CONSUMER PRICE INDEX.
42
What is a consumer price index?
A statistical estimate constructed using the pieces of a sample of representative items whose prices are collected periodically.
43
What is Demand Pull Inflation?
Too much money chases too few goods. There are many rich people trying to get the scarce amount of resources. The resulting competition makes opportunist rise in money as well as competitive bid in money
44
What is Cost Push Inflation?
A decrese in availability of a very important product, causing to be worth more. Anything generally associated or dependent on this product will now raise in cost as well.
45
How did the bubble with the start of the internet go down?
People were amazed by the internet and mass amounts of people began investing billions into it until the stock market collapsed
46
What is a recessionary gap?
a situation wherein the real GDP is lower than the potential GDP at the full employment level so working factories and people are not in use
47
What is an inflationary gap?
The amount by which the actual GDP exceeds potential GDP So people are over employed and factories are working over time. this is not sustainable and could lead to inflation
48
What is fiscal policy?
when the economy is going too slaw of too fast, the government can adjust spending levels and taxes to influence the economy
49
What problems are there with contractionary fiscal policy?
raising taxes, taking the money and higher productivity away to solve inflationary or dept problems sounds anti-intuitive and is extremely hard to sell. It causes many arguments and costs jobs
50
What is defecit spending?
Because spending less than tax money would ruin national production, the government needs tax money as well as dept money
51
What is Austerity?
raising taxes and cutting government spending to reduce dept
52
What is a deficit?
the amount by which a governments spending exceeds it's income over a particular period of time
53
what is dept?
the accumulation of a country spending more than they own
54
What is default?
When a country goes into so much dept that it doesn't pay properly that other countries may suspect they'll never get payed back and thus stop funding the country. the country loses all credibility in the end and falls into massive reccesion
55
What is a debt ceiling?
Limit on the amount of national debt that can be issued by the US treasury

Math (10 decks)

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