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Macro Exam 1 > EXAM 1 > Flashcards

EXAM 1 Flashcards

(101 cards)

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1
Q

4 main elements of the economy

A

households, businesses, governments and foreign countries

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2
Q

microeconomics

A

functioning of individual industries and behavior of individual economic decision making units, who gets the goods and services produced?

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3
Q

macroeconomics

A

factors that determine national output/product, looks at overall price level rising and falling, questions how many people will be hired in a year at a specific industry

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4
Q

economics

A

the study of how individuals choose to use resources provided by nature, behavioral science on how people make choices

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5
Q

opportunity cost

A

the best alternative given up when making a decision, occurs because resources are scarce

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6
Q

marginalize

A

process of analyzing the additional costs or benefits from a choice

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7
Q

efficient market

A

where profit opportunities are eliminated instantly

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8
Q

positive economics

A

understanding behavior and the operation of the economic systems without making judgments on the outcome

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9
Q

normative economics

A

looks at outcomes of economic behavior and asks if they are good or bad or if they can be improved

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10
Q

model

A

formal statement of a theory (usually mathematical) of a presumed relationship between two variables

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11
Q

variable

A

measure that can change from time to time

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12
Q

ceteris paribus

A

all else is equal, this is used to analyze a relationship between two variables while all others are unchanged

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13
Q

empirical economics

A

collection and use of data to test economic theories

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14
Q

4 criteria for judging economic outcomes

A

efficiency, equity, growth, stability

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15
Q

economic efficiency

A

condition in which the economy produces what people want at the least possible cost

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16
Q

economic equity

A

fairness, more equal distribution of income and wealth

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17
Q

economic growth

A

increase in total outcome of economy, occurs when a soccer acquires new resources or learns to produce more, when something was previously unattainable is now attainable

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18
Q

economic stability

A

the condition in which national output is growing steadily with low inflation and full employment resources

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19
Q

capital

A

things that are produced and used in production of other goods and future services

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20
Q

examples of capital

A

buildings, equipment, desks, roads

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21
Q

factors of production

A

inputs into the production process

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22
Q

3 specific factors of production

A

land labor and capital

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23
Q

theory of comparative advantage

A

specialization and free trade will benefit all parties even when some are more efficient than others

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24
Q

absolute advantage

A

a producer can produce the same product as another good or service if they can do so using fewer resources lowering the cost per unit

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25
comparative advantage
producing at a lower opportunity cost, trading present for future benefits
26
consumer goods
goods for present consumption, capital does not need to be tangible
27
investment
using resources to produce new capital
28
production possibility frontier (PPF)
graphic device that illustrates choice, opportunity cost and scarcity
29
marginal rate of transformation (MRT)
slope values of a societies PPF
30
economic expansion
economy is producing more, COULD be because of economy growth but not necessarily, PPF stays the same, we do not have things that were previously unattainable
31
economic contraction
we lose resources, entire PPF shifts, different than a recession because we just move to the interior of the PPF
32
saving
trading present for future benefits
33
intermediate good
a good that has not reached its final resting point
34
business cycle
a graphical representation of an economy production over time as a comparison to its potential production, ups and downs in performance
35
aggregate output
measure of how the economy is doing, total quantity of goods and services produced in a given period
36
expansion or boom
period from trough to peak of business cycle
37
recession or contraction
period from peak to trough of business cycle, a slump
38
depression
prolonged recession
39
unemployment rate
percentage of the labor force that is unemployed
40
inflation
increase in overall price
41
deflation
decrease in overall price
42
transfer payments
recipients do not supply goods, services or labor
43
goods and services market
households and government purchase goods in the market and from each other
44
labor market
when firms and gov purchase labor from households, households supply labor and gov demands it
45
money market
households purchase stocks and bonds from firms
46
share of stock
financial instrument that gives the holder a share in the firms profit
47
dividends
the firm can return some of its profit to stockholders instead of buying capital
48
fiscal policy
gov decision on how much to tax and spend
49
expansionary fiscal policy
taxes are cut or gov spending increases
50
contractionary fiscal policy
tax increases or gov spending decreases
51
great depression
severe economic contraction and a period of high unemployment, 1930s
52
stagflation
a situation in which there is high inflation on and off
53
financial markets
households save, businesses borrow
54
business sector and household sector
these two interact in the product market and factors market
55
government sector
takes those households and businesses taxes
56
foreign sector
we engage through imports and exports
57
blockage
problem in the economy
58
indicators of a healthy economy
steady and sustainable economic growth, full employment (low unemployment), stable prices and inflation
59
GDP
total market value of a countries output, the value of all final goods produced in a certain time
60
old output
not considered GDP because it was already counted when it was produced
61
expenditure approach
sums all the expenditures (purchases) on final goods as a proxy for production
62
factor income approach
sums up all the income earned in a given period
63
value added approach
adds up the value of each good at each stage go the production process
64
current dollars
nominal GDP, value in current dollars today
65
billions of chained dollars
real GDP, eliminates the role inflation plays
66
G-Gross
depreciation is included
67
D-Domestic
production within a countries borders
68
P-Product
only final goods and services included
69
depreciation
replacing old worn out capital
70
gross private investment
purchase of new capital (finished product used to produce more), new home construction, chances in inventory levels
71
personal consumption expenditures (C)
households spending on consumer goods
72
gross private domestic investment (I^a)
spending by firms and households on new capital
73
government expenditures and gross consumption
expenditures by federal, state, and local governments for final goods and services
74
net exports (EX-IM)-->(NX)
net spending by the rest of the world, exports minus imports
75
durable goods
last a relatively long time
76
nondurable goods
used up quickly
77
services
things we buy that do not involve production of a physical item
78
nonresidential investment
expenditures by firms for machines, tools
79
residential investment
expenditures for new houses and apartment buildings
80
change in business inventory
amount changed in given period
81
gross investment
total value of all newly produced capital goods
82
net investment
gross investment minus depreciation
83
national income
the total income earned by the factors of production owned by a country's citizens (8 income items summed up)
84
compensation of employees
largest component of national income, includes wages and salaries paid to house hold firms by gov
85
proprietors income
income of unincorporated businesses
86
rental income
minor, income received by property owners in form of rent
87
corporate income
second largest component of national income, income of corporations
88
net interests
interest paid by businesses
89
indirect taxes minus subsidies
taxes such as sales taxes, customs duties and license fees
90
net business transfer payments
transfer payments paid from business to others which are the income of others
91
surplus of gov enterprises
income of gov enterprises
92
net national product (NNP)
GNP-depreciation
93
statistical discrepancy
data measurement error
94
personal income
total income of households, income flowing in to households
95
personal saving rate
percent of disposable personal income saved
96
nominal GDP
GDP measured in current dollars
97
fixed weight procedure
uses weight from a given base year
98
Bureau of Labor Statistics
Calculates unemployment rate every month and it is released on the first Friday of each month at 8
99
consumer price index (CPI)
fixed weight index, does not account for consumers substitution away from high priced goods which leads to a tendency to overestimate inflation, computed by BLS each month, used to calculate inflation rate
100
producer price index (PPI)
indexes of prices that producers receive for productions at various stages not just at the final stage, detects prices early
101
3 categories of PPIs
finished goods, intermediate materials, crude materials

Macro Exam 1 (1 decks)

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