Homework Flashcards
A decision made on the margin is primarily a question of ____________________
how much?
The goals of equity and efficiency
tend to be in conflict with one another
Market failure
When economic interactions lead to inefficient outcomes
Marginal decisions are choices about __________________
Making incremental changes
The paradox of thrift suggests
When people save in anticipation of an economic downturn, they can worsen the downturn
Inflation may cause people
to stop using money and rely on bartering
According to Keynsian Economics, a depressed economy is caused by
inadequate spending
Movements in inflation are closely related to
Business cycle
Most widely used indicator of conditions in the labor market
unemployment rate
During recessions
unemployment increases
Trade deficit
value of imorts > value of exports
The idea that fiscal and monetary policies could be used to fight recessions was proposed by ________________________
John Maynard Keynes
In long run, overall level of prices is determined by:
Changes in money supply
Long run economic growth
Has important implications for policy concerns
Fiscal policy involves
Changes intaxation and government spending
Concept of business cycle
crucial role in developing macroeconomics
Government agency that calculates CPI
Bureau of Labor and Statistics
Overall level of well being
Tends to rise with GDP per capita
National income and product accounts keep track of
Consumer spending, business investment, government purchases
U.S GDP in 2010
14.5 Billion
If inflation rate has been constant, what is happening to overall price level
increasing at a constant rate
Consumer spending is _____ percent of GDP
70
Price index
Normalized measure of the overall price level
Falling GDP associated with ______________
rising unemployment
Natural rate of unemployment rises when
new entrants to labor force
Unexpected deflation
Makes it harder for borrowers to repay their loans
Actual unemployment =
cyclical + natural
When unemployment rate is low
most is frictional
real wage =
wage/price level
efficiency wage
wage set above equilibrium level to motivate workers
In 2010, ___ percent of unemployment people were considered long term unemployed
43
Costs with changing a listing price
menu costs
Unemployment rate based on a survey of ______________
60,000 families
Research and development is paid for by
a combination of private and government funds
Paul Romer described resarch and development as _____________________
the creation of improved instructions
1948 - 2007, labor productivity rose by
2.3 percent per year
Productivity depends on:
technology
human capital
Physical capital
Natural resources are
less important in determing productivity than human and physical capital
Real GDP per capita in 2010 was
7 times as it was in 1990
Countries in which investment counts for large part of GDP
have a high domestic savings rate
key statistic to track economic growth
real GDP per capita
New growth theory suggests that technological change_____________________
responds to economic incentives
growth accounting allows us to calculate
the effects of greater physical and human capital on economic growth
Annual growth rate of per capita GDP
1.8 percent
primary ingredient for long run economic growth
rising labor productivity
