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Economics > H-Econ Exam 4 > Flashcards

H-Econ Exam 4 Flashcards

1
Q

3 Types of Unemployment (ex.)
Frictional
Cyclical
Structural

A

Frictional - People are not employed but transitioning for better job
Cyclical - Co. supply and demands (success or failure) are the basis for employing people due to production
Structural - Unemployment caused by rifts between higher demand of more skilled workers, but there is an influx of underskilled workers

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2
Q

Employed people vs. Unemployed people differentiations

A

Unemployed people include all of those able-bodied and seeking work in the civilian labor force.
Discouraged workers are a subcategory of unemployed who are able to work but have decided to not look for work.

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3
Q

Economists see outsourcing as a prime example for

A

comparative advantage (ch. 2)

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4
Q

The demand for labor is a

A

Derived Demand: where the no. of workers hired and the wage rate are determined at the intersection of the MRP curve and Marginal cost curve for labor.
The Marginal cost curve for serves as the supply curve for labor

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5
Q

The “Backward Bending” supply curve

A

Is the phenomena when higher wages motivate workers to work less in replacement for leisure.

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6
Q

Unions on wages can increase union wages and decrease union nonunion wages and increasing nonunion employment in market. The effect of ____ ____ is to raise income and reduce employment.

A

Licensing requirements

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7
Q

Although retained workers benefit from the higher wage rate, the general view is

A

That increases in the min. wage creates unemployment

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8
Q

What is defined in terms of total people who work / are seeking work which include: resident armed forces.

A

Labor force

Related concepts: Civilian labor force, labor force participation rate, employed labor force, and unemployed labor force

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9
Q

What are the changing trends in the labor foce?

A 
Older workers - have decreased
Female workers - have increased
Unskilled workers - decreased
Service Oriented jobs - Increased
Agricultural jobs - Decreased
Union jobs - have decreased
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10
Q

The BLS measures unemployment by conducting how many surveys per year collecting approx. 60k sources of data?

A

12 - because they do it monthly

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11
Q

Offshore and outsourcing jobs have spread from ____ to ___

A

spread from manufacturing to service jobs

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12
Q

The rise and fall of economic activity relative to economy’s long term growth trend

A

Business Cycle

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13
Q 
3 forms of Business cycles 
Major 
Minor 
Long-Wave
(Describe)
A

Major: Wide fluctuations and serious contractions (success and failed)
Minor: No severe fluctuations - business’s staying afloat
Long-wave: cycles that last 50-60yrs

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14
Q

Example of internal & external forces that bring about business cycles

A

Internal: production, income, demand, credit, interest rates, and inventories
External: pop. growth, wars, basic changes in nation’s currency, natural catastrophes

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15
Q

Inventories play various roles in business cycles.
During troughs inventories would _____.
During expansions inventories would ______.
During peaks inventories would _____.
During contractions inventories would _____.

A

Inventories will drop in “troughs”

Inventories will increase to meet demand in “expansion”

Inventories will inventories and sales will increase in “peaks”

Inventories will reduce due to excess bc price stabilizes and demand slacken in “contraction”

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16
Q

If a business starts to expand through increased: production, employment, inventories, and financing what type of sources can overcome the effects of a trough?

A

Internal forces

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17
Q

Psychological impact on the business cycle

A

If investors perceive the economic conditions in the imminent future to be good or bad they will either increase or decrease their investment / financing the business.

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18
Q

Difference between
Leading indicators
Lagging indicators
Coincident indicators

A

Leading indicators precede peaks and troughs
Lagging indicators occur after turning points for general business
Coincident indicators act coinciding with peaks and trough activity

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19
Q

Major theories concerning causes to business cycle

A

See chap. 12

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20
Q

The Aggregate Supply and Aggregate Demand curves are used to explain the levels of national income and output and determine the equilibrium level average of prices and total output in the economy.

How are they different?

A

AD: Shows ttl amt. or real output *buyers will purchase at alt. prices
AS: Shows qty. of ttl. real output *producers will offer for sale at alt. price levels

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21
Q

Classical economists believe

A

The equilibrium output is normally the full-employment output

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22
Q

Aggregate expenditure is

A

Consumption investment + Goverment expenditure + Net Exports= Ttl planned spending

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23
Q

Chap 11: The Circular Flow of Income is the operation of demand output + income + new demand. What are its 2 channels of output and input called?

A

Leakages and Injections

24
Q

Leakages include

A

Resource income received and not spent on domestic firms (i.e. imports)

25
Q

Injections include

A

Added spending in the circular flow that are not paid out of resource income.
e.g. Investment, government spending, exports bought by foreign buyers

26
Q

The current market value of total final g/s produced within US

A

GDP: Gross Domestic Product

27
Q

GDP + value of g/s produced by US resources abroad less the value of g/s produced by foreign resources in the US

A

GNP: Gross National Product

28
Q

It is the difference between cost of raw materials and price of final product

A

Value Added

29
Q

Value Added + various producers + services = Total output of economy

A

Value Added Approach: he change of value of an intermediate or end product attributable to completion of a productive stage.

30
Q

The Value Added approach is not to be used to measure what?

A

Total output in the US.

In Europe it is used only as a basis for a “value added tax”

31
Q

Final g/s produced in a given period —intermediate goods do not count until they are made into a final good

A

Dollar Value of Total output

32
Q

How do you equate or readjust the GDP and national income?

A

Resource Income received - Resource payments = GNP

33
Q

The total productive resource costs of the g/s produced by our economy
and
income earned by the owners of productive resources in producing GDP

A

National Income:

Total resource cost and combined earnings

34
Q

The current income received by person from all sources

A

Personal Income

35
Q

A payment of money in return for which no current g/s are produced

A

Transfer Payment

36
Q

Government Transfers include

A

SSID Benefits, Unemployment Compensation, Welfare payments, and Veteran Benefits

37
Q

Personal income - Personal taxes

A

Disposable Income

38
Q

GDP is produced by the activity of

A

numerous businesses and individuals who in turn make payment to the various productive resources for their contributions.
Incomes received are used to purchase g/s.

39
Q

The Dept. of Commerce publishes how many reports on GDP?

A

Quarterly

40
Q

What are the 4 sectors of the GDP?

A

Personal Consumption Expenditure,
Gross Private Domestic Investment,
Imports and Exports,
Government

41
Q

What is the difference between final sales and GDP?

A

GDP represents net inventory

42
Q

Index that converts GDP and related data from current dollar figures into constant dollar figures…

A

GDP Implicit Price Deflators

43
Q

GDP expressed in constant dollars

A 
Real GDP
(Hint: It will be lower dollar value than the current dollar GDP)
44
Q

Per Capita disposable income adjusted for changes in price level

A

Real Per Capita Disposable Income

45
Q

Value of Nonmonetary Transactions: The unregulated portion of the economy involving g/s that are produced and exchanged without monetary transactions

A

Underground Economy

46
Q

The number of units of currency needed in one country to buy the same amt. of g/s that one unit of currency will buy in another country.

A

Purchasing Power

47
Q

Businesses pay out

A

Wages
Rent
Interest
Profits

48
Q

Savings, taxes, imports are all

A

Leakages which contract Circular Flow of Income

49
Q

Business investment, government spending, and exports

A

Injects that expand Circular Flow of Income

50
Q

Difference between GNP and GDP

A

GDP: Refers to current market value of total g/s produced by domestic and foreign resources IN Us.

GNP: Market value of total g/s produced by U.S -owned resources in foreign countries excluding foreign owned co. in U.S.

51
Q

The Value-Added approach to obtaining value the value of total output is to count the value added in

A

the production of both g/s = total payments made to the owners of the productive resources

52
Q

Total resource costs which include (___) and
earnings which include (___)
]from the production of GDP.

A

Total resources: Land, labor, capital, enterprise

Earnings: Wages, Rent, wages, interest, profit

53
Q

The categories in the allocation of GDP are

A

Personal Consumption
Private Domestic Investments
Net Exports
Government

54
Q

What is and is not the true measure of GDP?

A

True dollar is NOT the true measure of GDP

Real/Constant GDP takes into account price level between periods.

55
Q

How to calculate Real GDP?

A

Total GDP in yr
divided by
Implicit price deflator for that year

56
Q

Limitations of using GDP in economic welfare

A

Effect of Price changes

Impact of population changes per capita disposable income

Exclusion of monetary transactions

Social Costs

Value of Leisure time

Doesn’t distinguish between types of g/s

Does not treat effect output of durable goods over business cycle

57
Q

In order to make international comparisions

A

Purchasing Power Parity

E.g. How my currency’s value can buy more stuff from you

Economics (6 decks)

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