History, Trends, Introduction to MacroEconomics Flashcards
(Including Financial Crisis which is not included in Cards)
What is a recession?
2 or more quarters of negative economic growth
How long is 1 quarter?
3 months
What is deregulation?
When the government reduces or eliminates restrictions on industry with the goal of improving the ease of doing business
What is a derivative?
A financial contract that derives its value from an underlying asset
The buyer agrees to purchase the asset on a specific date at a specific price
What is a mortgage?
A long term loan that is secured by the value of the house
Designed to make home-ownership more affordable
What are the signs that the financial crisis is still lingering?
Many low paid jobs Government fiscal deficit Mortgages harder to get Interest rates increased Austerity
Who was John Maynard Keynes and what did he believe?
Economist who challenged classical view
Believed government intervention was needed to increase spending in the economy and create jobs
What was the classic view of economics?
A market economy tends to naturally restore itself to full employment after periods of recession
Who were Milton Friedman and Friedrich Hayek?
Free market economists (believed government should not intervene)
Had no solution for when economy was failing
What is ‘Ceteris Paribus’?
Assumption ‘all other things being equal or held constant’ when exploring the impact of a change in one variable
