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總經 | ECON > Final Review > Flashcards

Final Review Flashcards

1
Q
A

①
②
③
④
⑤
⑥
↑ ↗ ← →
↓ ↘ ⇐ ⇒ ⇔
≥ ≈ ≤ △ ∑ ≠ ±

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2
Q

The Number of Times
a unit of Currency is used
is known as ___

& calculation

A

Velocity of Money
velocity of circulation
. Flow of Income (GDP)
Vₘ = ———————————-
. Stock of Money (Supply)

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3
Q

Relations of
GDP→ NDP→ NNP→
Personal Y→ Disposable Y

A

GDP
-) depreciation
-) indirect taxes
= NDP
+/-) foreign factor Y
= NNP
+) Gov TP
-) undistributed corp π
-) corp π taxes
-) other Y not paid out
= Personal Income
-) income taxes
= Disposable Income

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4
Q

5 Source Categories
of GDI
Gross Domestic Income

A

1) Compensation of EE
wages+tips+benefits
2) Gross Operating Surplus
corp. gross profits
3) Gross Mixed Income
non-corp. gross profits
4) Taxes (net of subsidies) on Prod
property tax
5) Indirect Taxes (net of subsidies)
sales tax

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5
Q

4 Major Sources
of Long-term Economic Growth
& LAS

A
  1. Qty/Qlty of Labour Productivity (Human Capital)
  2. Physical Capital
  3. Tech change %
  4. Natural Resources
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6
Q

Structure of
Labour vs
Working-Age vs
Population

A

Population
= Working-Age + Non W/A

Working-Age Population
= Labour Force + Non L/A

Labour Force
= Employed+Unemployed

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7
Q

Working-Age Population
is people EXCLUDING

A
  1. < 15 yrs of age
  2. 3 Territories & Aboriginal residents
  3. Penal/ Mental/ Hospital residents
  4. Armed Forces
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8
Q

4 groups who are
Non Labour Force
in working-age population

A
  1. Retired
  2. Financially independent
  3. Discouraged Worker
  4. Chose to be (housemaker)
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9
Q

Definition of
1) Employed
2) Unemployed (calc.)

A

1.a In Labour Force
1.b Paid

2.a In Labour Force
2.b Not Paid
2.c Seeking jobs actively

. Unemployed
Unemp rate =——————–
. Labour Force

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10
Q

Labour Force Participation Rate =

A

. Labour Force
= ———————-
. Working-Age Pop.

. Emp + Unemp
= ———————-
. Working-Age Pop.

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11
Q

Unemployment Type

  • Time matching Ppl & Jobs
  • Searching for Right Job
  • Result of EI benefit
  • Student graduated
  • Homemakers enter market
A

Frictional Unemployment

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12
Q

Unemployment Type

  • Long-term Frictional Unemp
  • Spinoff of new/old industries
  • Retrain/Move ppl to work
  • Seasonal Unemp (e.g. winter only jobs)
  • Rood cause: Taste/Tech Changed
A

Structural Unemployment

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13
Q

2 Conditions each
of reported
Unemp Rates
Under- / Over-Stated

A

Understated because
1) Part-timers = Full-timers
2) Excl. Discouraged Workers

Overstated because
1) False info of EI recipient
2) False info of underground economy

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14
Q

Costs of Unemployment

& calculation

A

G/S Produced < Potential

GDP gap =
potential GDP - actual GDP (R/N)
= 2.5 x Cyclical Unemp %
x actual GDP (R/N)
Okun’s Law

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15
Q

An Index excl.
$ fluctuating wildly items,
gives better indication of long-term inflation rates

A

Core CPI

excl. fruit/ vege/ oil/ tobacco/ mortgage

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16
Q

2 Measures of Inflation

A

1) CPI
Explicit index
Bundle of (constant) consumer G/S for fam-of-4 prices collected/mon
for consumer incl. IMPORTs
Excl Capital & Gov exp.

2) GDP Deflator
Implicit index
Domestic G/S prod incl. goods of capital/ export/ consumer & gov srv.
No Imports
Bundle may change yearly
Stat Canada uses

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17
Q

Formula to measure
Price or Income
of the Past

A

. Nom.Value₂
RealValue₁ =—————– x CPI₁
. CPI₂

CPI₁ = CPI @base yr or yr 1
RealValue₁ : item value if in yr 1

18
Q

Relationship btw
△% Nom. Income
△% Real Income
Inflation Rate

A

△% Nom. Y =
△% Real Y + Inflation Rate

19
Q

2 Costs of Inflation

A

1) Redistributive costs
a. $$ from weak → rich
b. $$ from lender → borrower

2) Output costs
due to uncertainty
- Invest ↓
- Menu costs ↑
- Export ↓ (Import ↑)
⇒ GDP ↓ & Job ↓

20
Q

2 Types / Causes of
Inflation

A

1) Demand-Pull
Total demand/spending
exceeds capacity to prod

2) Cost-Push
Per-unit prod costs ↑
a. Wage-push
boss ↑ $ for EE are well-paid
b. Profit-push
industry too strong
c. Import-push
OPEC

21
Q

Generally when
Inflation ↑ or ↓ ⇒
Unemployment __ or __

A

Unemployment ↓ or ↑

counter-cyclical fiscal policy

22
Q

3 Reasons why
AD Crv is
Downward Sloping

A

1) Real Balance effect
$↑⇒ ppl spend (C) ↓
2) Interest Rate effect
$↑(inflation)⇒ int rate↑⇒ Invest↓
3) Foreign-Trade effect
$↑⇒ export ↓

23
Q

When Macro-Equilibrium occurs @ LAS, the economy is at ___

when occurs
< LAS = ___
> LAS = ___

A

Full Employment Equilibrium

Recessionary Gap
2 consec. qtr=RECESSION

Inflationary Gap
output level>Potential GDP

24
Q

2 Schools of Thoughts
about
whether economy
self-adjust to
economic gap

A

1) Neoclassical LAS only
a. Economy ADJUSTS the GAP
b. Market is competitive/ efficient
c. $ & Wages adjust rapidly
to surplus/ shortage
∴ Economy always
@Full Employment

2) Keynesian AS –
a. GAP occurs often & lasts long
b. Market is NOT Competitive
∵ Corp. & Unions powers
c. $ & Wages Sticky
∴ Gov Intervention is required
for Full Employment

25
Q

An Inflationary Gap
is closed by
__ Nom. Wage
& __ Price Level
⇒ __ Real GDP

A

Nom. Wage ↑
Price Level ↑
⇒ Real GDP ↓

26
Q

Stagflation is caused by
___ + ___

A

Recession with
↑Inflation + ↑Unemployment

27
Q

The Income @which
has Equal Value of
Production &
Aggr. Expenditures

A

Expenditure Equilibrium

Y = AE

Injections = Leakages
I+G+X=T+Im+S
nm
No Unplanned Investment

28
Q

Relations btw
MPE
MPC
MPM

A

MPE = MPC - MPM

∵ Consumption incl. Import
& GDP excl. Import

29
Q

$1 Increase in
Autonomous Spending
leads to
more than $1 Increase
in Income & AE

& formula

A

Multiplier

. ∆ Income
Multiplier = ——————
. ∆Auto. Expenditures

. 1 1
= —— = ———
. MLR (1-MPE)

30
Q

When using Fixed X Rates
DD of currency ↑
⇒ Currency value ___(shortage/surplus)
so it’s ___-valued (over/under)

A

Shortage
Under-valued

⇒ Export↑
⇒ Money supply↑
⇒ Inflation
⇒ Price level↑ ⇒ Export↓

31
Q

When using Fixed X Rates
DD of currency ↓
⇒ Currency value ___
(shortage/surplus)
so it’s ___-valued (over/under)

A

Surplus
Over-valued

⇒ Export↓
⇒ Foreign Reserves↓
⇒ Recession
⇒ Price level↓ ⇒ Export↑

32
Q

3 Subcategories of
Balance of Payments

A

1) Current Acct
Exports & Imports
Income/Expenditure
2) Capital Acct
∆ in Ownership of Assets
direct/portfolio inv.
3) Official Settlement Acct
∆ in Foreign X Reserves
= central bank gain/loss foreign currency

33
Q

Status that Bank of Canada
provides Foreign Reserves
⇒ Outflow of Foreign Reserves

when CAD$ is less demanded by foreign

A

Balance of Pmts Deficit

34
Q

Status that Bank of Canada
gains Foreign Reserves
in exchange for CAD$
⇒ Inflow of Foreign Reserves

when CAD$ is more demanded by foreign

A

Balance of Pmts Surplus

35
Q

3 Schools of
Fiscal Policy

A

① Countercyclical FP
Keynes：Gov救市
G↑ T↓ in Recession
G↓ T↑ in Inflation
⇒ AD → LAS
② Balanced-Budget FP
Gov：有$多花，沒$少花
Automatic Stabilizer: like ①
Self-Adjustment ⇒ AS → LAS
∵ wage↑ in Inflation
& wage↓ in Recession
③ Cyclical Balanced Budget FP
Balance budget over Biz Cycle
⇒Accept Cyclical Deficit/Surplus
Avoid Structural Deficit/Surplus

36
Q

When Removing Tariff
Currency Value ↑/↓ ?
Total Value of Trade ↑/↓ ?
& why?

A

Removing Tariff
⇒ $↓ ⇒ DD for Import ↑
⇒ Supp of Domestic $$ ↑
⇒ Domestic $$ Value ↓
⇒ Export ↑
⇒ Total Value of Trade ↑
(import & export ↑)

37
Q

△Balance Sheet
When Loan is issued &
Cheque is deposited/cleared
@Same Bank or
Another Bank

⇒ All Banking System

A

When Cheque is deposited@
Same Bank
Reserves N/E| Deposits ↑
Loan ↑

Another Bank
Reserves ↑| Deposits ↑
while original bank
res. ↓| Deposits N/E (↑ then↓)
loan ↑

⇒All System
Res. N/E| Dep. ↑xmultiplier
Loan ↑xmultiplier

38
Q

2 Reasons/Demands
that ppl Hold Money

A

①Transactions DD for $$
$$ as medium of X
GDP↑(income↑CPI↑)⇒DD↑
autonomous

②Asset DD for $$
$$ as store of wealth
a. rainy day needs
b. buy big-ticket when low int. rate
Inversely Related to Int. Rate
Keynes: Motives of
Speculative & Precautionary

39
Q

In OMO open market ops
Gov buy bonds to __ Int Rate
& sell bonds to __ Int Rate

A

Gov buy bonds to ↓ Int Rate
($$ supp→ market)
& sell bonds to ↑ Int Rate

(bond’s int rate↓
∵no need to attact $$;
bond’s int rate↑
∵need to attact $$)

40
Q

How Expansionary/Contractionary Monetary Policy transmit $$ in Economy & Result

A

Gov ↑$$ Supp by buying bonds
⇒ int rate↓ ⇒ C/I ↑
& X rate ↓⇒Xn↑
⇒ GDP/CPI ↑ (Exp MP)
———
Gov ↓$$ Supp by selling bonds
⇒ int rate↑ ⇒ C/I ↓
& X rate ↑⇒Xn↓
⇒ GDP/CPI ↓ (Con MP)

41
Q

2 Schools of Views to
Firm’s Sensitivity to △Int Rate

⇒Impact on Economy/GDP

A

Firm is __ to Int Rate
Monetarist: Sensitive (flat)
Keynes: Insensitive (steep)

⇒Impact on Economy/GDP
Monetarist: BIG
Keynes: small

42
Q

2 Schools of Views to
Ppl’s Sensitivity to △$$ Supp

A

Ppl are __ to $$ Supp
Monetarist: Insensitive (steep)
Keynes: Sensitive (flat)

總經 | ECON (10 decks)

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