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Macro Economics > Exam 1 > Flashcards

Exam 1 Flashcards

1
Q

Microeconomics

A

Part of economics concerned with single factors and the effects of individual decisions

Individual

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2
Q

Macroeconomic def

A

Part of economics concerned with large scale or general economic factors
Like interest and national productivity

Large scale

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3
Q

Positive economics is

A

Object and fact based

Statements can be tested, proved, disproved

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4
Q

Normative economics is

A

Subjective and value based

Statements are opinion based

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5
Q

Demand variables

What are they

A 
Desires
Scarcity 
Opportunity cost
Marginal cost 
Priorities
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6
Q

Law of demand

A

There is an indirect relationship between the price of a product and the quantity demanded

Inverse relationship of P and Q demanded
One increase other decrease

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7
Q

Determinant of demand

A

Population
Income
Taste and preference
Price of substitutes and complements

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8
Q

Demand shifts

A

Shift left is decrease

Shift right is increase

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9
Q

5 factors of production

A 
Land 
Labor
Capital 
Entrepreneurship
Knowledge
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10
Q

Exchange theory:

Voluntary

A

Exchanges

Voluntary Transaction

Gift/credit exchange

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11
Q

Voluntary transaction

A

Both people benefit
D+ +D

Both benefit

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12
Q

Gift/credit exchange

A

D+ +D

(Future return)

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13
Q

Involuntary exchange

A

Force

Fraud

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14
Q

Forced exchange ex)

A
  • (“). (“)+
    - S —————> +D

Forced to give

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15
Q

Fraud exchange example

A

+D

Someone gives faulty check to buy car

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16
Q

Opportunity cost

A

The next best thing you must give up to get something else

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17
Q

Law of supply

A

Direct relationship between price and quantity supplies

Direct relationship between price and quantity

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18
Q

Profit equals

A

Revenues - expenses

P= R-E

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19
Q

Price - cost =

A

Profit if positive

Loss if negative

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20
Q

Rising cost would mean

Lowering cost would mean

A

Supply would go down
Shift left

Supply would go up
Shift right

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21
Q

Surplus is when

A

The new shift in supply or demands is above the new equilibrium created

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22
Q

Shortage when

A

New supply or demand shift is under the new created equilibrium

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23
Q

Economic spectrum

A

Pure market economy

Mixed economy

Pure command economy

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24
Q

Pure market economy (PME)

A

Zero percent govt control

25
Q

Pure command economy

A

100 percent government control

26
Q

Government interventions

A

Subsidies and taxes

Quantitative restrictions
Quota and license

Price control
       Legal max (ceiling) legal min (floors)

Prohibition and compulsions
Black market

27
Q

Subsidies and taxes cause

A

Shifts in demand or supply

28
Q

Quantitative restrictions are

A

Quotas and requiring licenses

It raises prices artificially

29
Q

Price control example

A

Legal max is called ceiling

Legal minimum is called floor

30
Q

Prohibition and compulsion causes

A

Black markets

Caused by laws and regulations

31
Q

What happens in 1919 for Us wheat and farmer

A

1918 is the start of ww1 and during the war the demand of US wheat increased

Shifted demand right

32
Q

What happen in 1919 for us wheat and farmer

A

Ww1 end

33
Q

What happen in 1920 for us wheat and farmer

A

Improvement in farm productivity because of improved technology after war

Shifts supply right

34
Q

What happens in 1929 in us wheat and farm

A

Hoover implements farm stabilization act to restore golden era (1914) by otherizing purchase of wheat

People have no money to purchase cause depression

Fails

35
Q

What happen in 1933 for us wheat and farmer

A

Agriculture adjustment act with FDR

USDA- implements
Storage of wheat, pay farmers not to grow, paid to destroy

In order to drive prices of wheat up

1950 solid banks (mandatory)

36
Q

Winners and losers of wheat and farming

A

Winner
Farmer, govt agency, storage comp., farm equipment comp, politician

Lose
Consumer
Taxpayer

37
Q

Farm bill

Cause

A

Storing
Destroying
Pay not to produce
Ban import

38
Q

Congress has what inside it

A

Senate 100 (2 each state)

HoR 435

Congress 535 electoral votes

39
Q

What are the 5 lobbying effects

A

Senate effect

House effect

Seniority

Special interest

Logrolling

40
Q

Senate effect

Is what

A

Ex)

NY pop 1000 gets 2 vote for senate

KS + C pop 500 gets 4 votes for senate

Urban city are out represented then rural areas
Therefore more effected lobbying of rural place

41
Q

House effect

A

Ex)

Kansas

Four district 1 urban 3 rural

Urban more pop then all 3 rural combined

Urban gets 1 vote compared to 3 rural farm district

Move to diff city vote don’t change

42
Q

Seniority what is

A

Seniority
How much time you were in office
Get more power cause more known

Urban- many changes in city, no seniority build up (nobody know)
No re elected

Rural- less change in rural, so seniority advantage (people know you) re elected

43
Q

Special interest what is

A

Politician raise price 1 cent to wheat bread ( promise to farmer to get vote) –> consumer many buy –> increase food tax —> becomes subsidies to farmers —> farmers give some of earning to politicians as campaign contribution

44
Q

Logrolling what is

A

It is when a politician puts
Your interest in my bill if you vote for me

You scratch my back I scratch yours

45
Q

NYC 1937

A

Birth of the medallion system

46
Q

Medallion system what is

A

It puts a quota to how much taxi there can be in the city or area

Cost really cheap at first– like 10 dollar per — but now it can sell to 1 million per medallion

47
Q

What did medallion system do?

A

Caused a quota to cabs driving

Raised price for consumers
Some consumer lost service cause of price

48
Q

Who win and lose

A

Win
Original can owner, govt agency (enforce rule, bigger budget), alternative transportation (people not ride cab), banks (get business bc of calaterall from cab owner)

Lose
Consumer (pay more-high income, lose service-low income), potential owner (get alt employment, be gypsy), taxpayer of medallion

49
Q

Washington have no medallion system

Soo

A

Lower price
Easy to get in and convenient
Easy for new comer to join job
Ownership by ethnicity change (diverse)

NYC IS OPPOSITE

high price
Hard to get in
Hard for new
Ownership by same person

50
Q

Medallion and banks

A

Owner give medallion to bank as callateral

Banks give owner money (loan)

You do some big project and get the title back

51
Q

Iron triangle what is

A

Special interest group: taxi owner

Taxi owner – give money–> politician –> give taxpayer money to govt agency
–> enforce bill and give benefit to taxi owner

52
Q

What happens if wage increases to labor

A

If wage goes up there is more unemployment

Which is a surplus supply of workers

A lot of potential workers but little demand bc of higher medium wage

53
Q

Minimum wage causes a

A

Legal min on the graph

It puts a floor

54
Q

On graph of minimum wage increase

A

There is a legal min

Surplus of unemployed

Workers who keep jobs at higher wage are to the left

Potential workers are to the right

55
Q

Employees who keep job at higher wage have what characteristics

A 
High 
Performance
Productivity 
Education 
Experience 
Likely to keep men
Older
Seniority
56
Q

Employees who let go or not hired sat lower wage have what characteristics

A 
Low
Performance 
Education 
Experience 
Less seniority 
Younger
Diff ethnicity 
Women
57
Q

Walter Williams case study

A

Employee a and employer b

A com and B comp

6/hrs and 8/hrs

W+M and just M

Product A and Product B

Cheaper and more expensive

Consumer purchase A

58
Q

S Africa study is what

A

1 skilled worker can be hired over 3 unskilled workers because of minimum wage

Pay 50 for good

Or pay 17x3 51 for unskilled

Minimum wage rise
Skilled guy keep job without fear to loosing for unskilled

59
Q

Career ladder what is

A

People are usually paid on job to get skills to move up the career ladder 1-10

Some people who pay school to get skills get directly higher on the career ladder 10

Macro Economics (2 decks)

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