Final Exam Section 3 Flashcards
Types of Unemployment
a. Frictional Unemployment
b. Structural Unemployment
c. Seasonal Unemployment
d. Cyclical Unemployment
e. Technological Unemployment
a. Unemployment caused by workers who are between jobs for one reason or another
b. occurs when demand for workers skills are reduced from a fundamental change in the operations of economy
c. occurs from changes in weather or demand for certain products
d. joblessness caused by a reduction in the economies total demand for goods and services
e. occurs when automation or low skilled jobs are replaced with machines or other equipment that does their job
a. Natural Rate of unemployment
b. Full employment
a. min level of unemployment that our economy can achieve in normal times
b. when the rate of unemployment is equal to the natural rate
Types inflation
a. Creeping inflation
b. Galloping inflation
c. Hyperinflation
d. Demand-pull inflation
e. Cost-push inflation
a. 1-3%
b. 100-300%
c. 500+%
d. inflation caused by increases in aggregate demand
e. inflation caused by rising costs of production
a. Gross domestic product (GDP)
b. whats not in it
the dollar amount of all final goods and services produced within countries national borders in a year
b. Intermediate products - products used to make other products already counted in GDP
Secondhand sales - the sales of used goods
Non-market transactions - transactions that do not take place in the market
a. Aggregate demand
b. Aggregate supply
a. the total quantity of goods and services demanded at different price levels
b. the total value of goods and services that all firms would produce in a specific period of time at various price levels.
Real balance effect
increase in the amount of aggregate output demanded that results from the increased real value of the publics financial assets
Interest rate effect
the increase in the amount of aggregate output demanded that results when a reduction in overall price level causes interest rates to fall
International rate of effect
the increase in the amount of aggregate output demanded that results when a reduction in price level makes domestic products less expensive relative to foreign products
Shifters of aggregate demand:
a. Household consumption
b. Investment by firms
c. Government spending
a. what people in a household buy, if people buy more stuff it shifts right
b. increase in interest rates would lower investment and push the AD curve to the left
c. an increase in gov spending would shift the AD curve to the right
Shifters of AS:
a. Employment costs
b. Cost of other inputs
c. Impact of gov
a. wages, employment taxes, unit labor costs are also affected by the level of labor productions
b. commodity prices, raw materials
c. environmental taxes, business regulations that affect the cost of production
Discretionary Fiscal Policy
The deliberate changing of the level of government or taxation in order to guide the economy’s performance
Contractionary Fiscal Policy
decreasing government spending or increasing taxes
Expansionary Fiscal Policy
increasing government spending or decreasing taxes
Automatic Stabilizers
changes in the level of government spending or taxation that occur automatically whenever the level of aggregate income (GDP) changes
a. Monetary Policy
Tools:
b. Open market operations
c.. reserve requirment
d. discount rate
a. designed to control the supply of money
b. Open Market Operations - the buying and selling of gov securities
Reserve Requirement - the ability to alter the reserve requirement
Discount Rate - the interest rate at which banking institutions can borrow from the federal reserve
a. Structural Fiscal Policy
b. Passive Fiscal Policy
a. includes plans and programs put into operation to strengthen the economy in the long run
b. does not require new or special action to go into effect (it automatically reacts to the economy)
