Final Exam Flashcards
1
Q
On Canada’s balance of payments, a German buying. Canadian bond creates a
A
- credit on the capital account
2
Q
On Canada’s balance of payments, a Canadian buying an American avocado creates a
A
- debit on the current account
3
Q
A Canadian buy-in gan avocado from the U.S. creates additional
A
-demand for U.S. dollars
supply of Canadian dollars
4
Q
Additional shipments of Canadian lumber to the U.S. will cause
A
- appreciation of the Canadian dollar
5
Q
Falling interest rates in Canada with steady interest rates in the U.S. will cause
A
- a decrease in the demand for Canadian dollars
6
Q
aggregate behaviour
A
- the behaviour of all households and firms, taken together. (e.x. studying unemployment)
7
Q
aggregate output
A
- the total quantity of goods produced by the entire economy in a given period
8
Q
Name the three major concerns of macreconomics
A
1) output growth
2) unemployment
3) price level stability (inflation and deflation)
9
Q
sticky prices
A
- are prices that don’t always adjust rapidly between quantity supplied and quantity demanded
10
Q
unemployment rate
A
- the percentage of the labour force that is unemployed
- key indicator of the economy’s health
- measures the percentage of people who are ready and able to work but don’t have a job
- if there is an unemployment rate - then that means the aggregate labour market is NOT in equilibrium
- near impossible to not have an unemployment rate in a dynamic economy
11
Q
inflation
A
- is an increase int eh overall price level
- governments want to keep inflation low
- encourages borrowing, consumption, but can also discourage investment
12
Q
hyperinflations
A
- a period of very rapid increase in the overall price
- ver rare –> could destabilize an economy or government
13
Q
deflation
A
- a decrease in the overall price
- discourages borrowing and consumpiton
14
Q
stagflation
A
- high inflation consistent with high unemployment
15
Q
Name the 4 components of the macroeconomy
A
- households –> private sector
- firms –> private sector
- the government –> public sector
- rest of the world –> foreign sector
16
Q
Name the 3 market arenas
A
1) goods and services market
2) labour market
3) money market
17
Q
labour market
A
- input market
- households = SUPPLY labour
- firms and governments = DEMAND labour
- rest of the world = SUPPLY and DEMAND labour
18
Q
labour productivity
A
- aggregate output/ # of hours worked
19
Q
money market (capital/financial)
A
- made up of the borrowers and savers
- firms and government = demand funds
- consumers = supply funds
- firms - borrow (demand) to build new buildings to earn more in the future
- they consider the cost and availability of borrowing vs raising equity
20
Q
the great gatsby
A
- set in the 1920s
- boom cycle
- very wealthy and gridy
21
Q
the grapes of wrath
A
- set in the early 1930s
- bust cycle
- bad for the economy, very depressing time
22
Q
great depression
A
- a period of severe economic contraction and high unemployment in 1930s
- said that a lot of monetary and fiscal policy errors prolonged the depression
- didn’t end until the war started
23
Q
John Maynard Keynes
A
- father of macroeconomics
- influenced byt hed depth of the great depression
- ground-breaking book - general theory of employment
- says that government should step in when aggregate demand is low
24
Q
All other things being equal, an increase in the domestic price level will
A
- decrease the value of real wealth and cause the consumption and aggregate expenditure functions to shift dowward
25
All other things being equal, a decrease in the domestic price level will shift the next export function
- upward, thus causing the aggregate expenditure function to shift upward
26
The aggregate demand (AD) curve relates
- equilibrium real national incomes to the price level
27
All other things equal, a fall int eh domestic price level causes
- the aggregate expenditure curve to shift upward and hence leads to a movement downward and to the right along the AD curve
28
All other things being equal, the AD curve shifts to there ight was a result of
- increased government expenditure
- increased autonomous exports
- increased investment expenditure
- decreased tax rates
29
All other things being equal, an increase in desired investment expenditures will
- shift the AE curve upward
- shift the AD curve to the right
- cause the equilibrium levels of real national income and price to increase if the economy operates with a positively sloped SRAS curve
30
fine-tuning
- refers to the governments role in seeking goldilocks solutions (just right solutions) to inflation and unemployment
31
treasury bonds, notes, or bills
- promissory notes issued by the federal government when they borrow money
- promise to pay
32
corporate bonds
- promissory notes issued y tech corporations when they borrow money
33
stock
- a quantity of something at a given time
34
flow
- a quantity measured per unit of time that shows how fast something is changing
35
GDP (gross domestic product)
- the value of all goods and services produced in a. country in a year
36
frictional unemployment
- arises from the flow of individuals form job to job and in and out of employment. (unemployed for short period of time because of constant movement between jobs).
37
structural unemployment
-mismatch of available jobs and available skills. (don't have right qualifications for jobs that are available). Also includes seasonal unemployment
