Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Macro Economics > Macro Econ Text 2 > Flashcards

Macro Econ Text 2 Flashcards

1
Q

Historical school of economic thought?

Name the 3

A 
Pure market economy 
- Classical liberal 
- Mercantilist
- Communist 
Pure command economy
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Classical liberal

Philosophical roots started with whom

A

John Locke and the belief of life the Devine right of kings is wrong

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Classical liberal

Economist

A

Quesnay came up with
Laissez faire - leave it alone the economy, it will heal itself

Adam Smith and his wealth of nations (1776)

Wealth of nations not measured by gold it is measured by the consumption of a nation

Pursuit of own happiness

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Classical liberal

Major ideas and policy

A

Q

Laissez Faire
Leave it alone, “let the economy heal itself”

A

Wealth of nations
Wealth of nations not measured in going or but in consumption of goods, etc

  • trade is positive
    Pursuit of own interest not the king
    Competition
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Mercantilist

Philosophical roots

A

Thomas Hobbs
Devine right of kings
God gave kings power to rule over the people

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Mercantilist

Economist

A

Thomas mun

Measure of wealth is gold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Mercantilist

Major ideas and policy

A

Measure of wealth of a nation is gold

Dominion of king to collect all through expeditions etc

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Classical communist

Philosophical roots

A 
Hegel 
The dialectic 
Thesis clash with antithesis 
Creates sythesis clash with antithesis 
Creates synthesis
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Classical communist

Economist

A 
Karl Marx 
Wrote communist manifesto 
Dialectic materialism 
Inevitable violent revolution 
Abolition of traditional institutions
Dictatorship of proletariate
Collectivization of society 
--- central planning and the egalitarian society 
Each according to ability and each to according to need
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Classical communist

Main ideas and policies

A 
Dialectic materialism 
Inevitable violent revolution 
Abolition of traditional institutions 
Dictatorship of proletariat 
Collectivization of society 
Central planning and egalitarian society
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Current school of economic thought

A 
PME
-Austrian 
-Monetarism (monetarist)
-Keynesian 
-communist 
PCE
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Monetarist

Economist

A

Friedman

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Monetarist

Problem they want to solve

A

They believe that they handled Great Depression wrong

The root cause was 1913 us set up the central bank federal reserve

They should of contract the the supply of money instead of giving out more money which only made it worse

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Monetarist

Main idea and policy

A

Indirect govt control
Monetary policy: federal reserve system
Regulate money supply, interstate banking

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Austrian
Economist
Problem want to solve
Policy and main idea

A

F Hayek

Wrote the road to serfdom
Monetary policy leads to problems, doesn’t cure, but causes boom and bust cycle
Laissez faire - end govt controls

Minimum role of
Govt protection 
Ending fiscal policy and monetary policy
Collectivization 
Individual freedom
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Communist

Economist
Problem want to solve
Policy and main idea

A

1917 Lenin and stalin

Violent revolution has to happen and it can happen on its own
Bolshevik revolution

Dialectic materialism
Inevitable violent revolution (oppressed rise up)
Dictatorship of proletariate
Abolish traditional institutions
Central planning (collectivization and egalitarian)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Keynesian

Economist
Problem want to solve
Policy and main idea

A

JM Keynes

Wrote general theory 
Direct government intervention 
In form of fiscal policy 
--- government spending 
-- taxation 
-- debt 
-- regulation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Business cycle

Over expansion

A

To much growth in economy
(can’t be sustained)

Goes over the steady growth ideal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Business cycles:

Expansion

A

economy moves from a trough to a peak. It is a period when the level of business activity surges and gross domestic product (GDP) expands until it reaches a peak.

Increase growth of economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Business cycle

Stagnation

A

No growth in economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Business cycle

Contraction

A

contraction occurs after the business cycle peaks but before it becomes a trough.

to occur when a country’s real GDP has declined for two or more consecutive quarters.

Decline in growth of an economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Business cycle

Recession

A

Period of economic down

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Business cycle

Depression

A

Long period of recession

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

GDP (Gross Domestic Product)

What is what does it measure

A

measure of a nation’s total economic activity.

More specifically, GDP represents the monetary value of all goods and services produced

How much people spend

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Unemployment

What is it

A

People who are out of work but are looking for jobs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Unemployment types

FSCS

A

Frictional
Seasonal
Cyclical
Structural

Fscs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Frictional unemployment

A

Out of work for personal reasons

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Seasonal unemployment

A

Out of work during a certain time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Cyclical unemployment

A

Out of work because downturn in business cycle (downturn in economy)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Structural unemployment

A

Out of work but looking for a work all the time (never get job even if economy is good)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Inflation

A

Is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

CPI (Consumer price index)

A

measure that examines the weighted average of prices of a basket of consumer goods and services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Seigniorage

A

Seigniorage may be counted as revenue for a government when the money that is created is worth more than it costs to produce it.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Keynesian and neo classical divergence

Economy self correcting or not

A

Keynesian —
Economy is not self correcting

Neo classical view—
Economy is self correcting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

GDP

What it allows us to measure

A

Easy to make comparison against other nations

Easy to measure

Easy to see changes over time

Doesn’t input household task (not paid)

Looks at money flow

37
Q

Classical view that the economy is self or not correcting

A

The economy is self correcting

Interest and investment fall
People panic spend less and save more
Therefore people borrow more

38
Q

Keynesian view that the economy is self or not correcting

A

The economy is not self correcting

Businesses borrow less therefore pay people less

39
Q

Consumption function is what

A

an economic formula representing the functional relationship between total consumption and gross national income.

40
Q

Consumption function:

Multiplier effect

A

5000=4000+1000
4000=3200+800
3200=2560+640
2560=2048+512

Total potential changes 25000=20000+5000

41
Q

MPC (Marginal Propensity to Consume) is what

A

How much you spend per amount you earn

Ex) mpc=3/4

4000 (income) x (3/4)= 3000 spent

Therefore mps= 1/4

42
Q

MPS (Marginal propensity to spend)

Is what

A

How much you save per amount you earn

Ex)

MPS=1/4
Income: 4000

4000(1/4)= 1000 spent

43
Q

Multiple (multiplier factor) factor

How to find and is used for what?

A

It is found using the formula:

1/mps

Ex) 1/mps= 1/1/4= 4

This is then used to find total potential change (income spending in the economy)

4 x original income from multiplier effect

44
Q

Fiscal policy prescriptions for contraction

A

Increase government spending and decrease taxation

Bring back to full employment level

45
Q

Fiscal policy prescriptions for over expansion

A

Decrease government spending and increase taxation

Bring back to full employment level

46
Q

FEL (Full employment level)

A

level of employment rates where there is no cyclical or deficient-demand unemployment.

The equilibrium point

47
Q

Fiscal policy prescriptions
Which is popular

Balanced
+G-T
-G+T

A

Increased government spending and decrease taxation

Creates a deficit putting us in debt

But the beliefs is that in the long run you will be able to pay off the debt

Print more money and borrow more money

48
Q

Fiscal policy prescriptions
Which is unpopular

Balanced
+G-T
-G+T

A

Decreasing government spending and increasing taxation is unpopular

It sounds better and creates a surplus

Which conferences a deficit

49
Q

Forecasting ( economic indicators)

A

Lagging
Coincident
Leading

Lcl

50
Q

What is lagging economic indicator

A

Analyze the past

51
Q

What is coincidental economic indicator

A

Explain the present

52
Q

What is leading economic indicator

A

Predict the future

53
Q

Critique about fortune telling

A

Economist are basically fortune teller

54
Q

Philips curve what is

A

Shows the trade off b/w the rate of inflation and the rate of unemployment

the fiscal policy prescriptions aim to be in the middle, during contraction, increasing government spending and citing taxes

Fiscal policy states to fight over expansion (inflation) you cut gov spending and increase tax, to fight contraction you would do it in vice versa

55
Q

Phillip curve prescriptions

A 
Fiscal policy states to fight 
Over expansion (inflation) you cut government spending and increasing tax

Contraction (unemployment) you increase government spending and cut taxes

56
Q

Phillips curve what do the critics say

A

Phelps and critics say that the Phillips curve is wrong

Inflation and unemployment come at the same time

And

Inflation doesn’t go way right away

The economy is unpredictable there have been some time in history that both inflation and unemployment have been high, creating stagflation– how do you combat that

57
Q

Stagflation

A

High unemployment and high inflation

58
Q

Public goods what are they

A

They are goods that benefit all and are non exclusive
Owned by government

They create a “free rider problem” which won’t be covered by the private sector

Lead to tyranny, offense and waste

Ex) the lighthouse

59
Q

Free riders at the Light house

A

Light houses used to be private owned and built

But people using the light house want a free ride bc they don’t want to pay for the light house

So they go to the government and ask them to tax people (to pay for it) or else there will be no light house

60
Q

Who does better private or public companies

A

Private companies does better job then government public companies

Bc govt has no incentives to renovate or do above and beyond (cause they got monopoly)

Private company also has motivation
Private owned institutions = less taxes and better service then govt owned

61
Q

Lorenz curve shows what?

A

It shows the distribution of income

Perfectly equal distribution 
Robin Hood effect 
Actual distribution 
Sharif effect
Perfectly unequal distribution
62
Q

Robin Hood effect on Lorenz curve

A

There is a legitimate function off

Government to redistribute income from the rich to give to the poor

63
Q

Lorenz curve critics

Name the 3

A

Power critics
Productivity critics
Ethics critics

PPE

64
Q

Power critics

A

The rich have more power

The powerful May say that they are helping the poor to be popular but they really intend to take from both the rich and the poor to give to the powerful

65
Q

Productivity critics

A

Equal distribution of income limits the incentives for productivity and growth

Even the poor are better off in a growing economy with incentives for productivity

66
Q

Ethics critic

A

If it is wrong for a person to take another persons money against their will, then it is also wrong to ask others to do it for them

The action is the same no matter how much people approve

67
Q

Laffer curve

A

representation of the relationship between rates of taxation and the resulting levels of government revenue.

68
Q

Laffer curve

A

As tax rate goes up government get less revenue

Cut taxes increases govt revenue

69
Q

Taxes and affect on human behavior

People change behavior at high tax

A 
They: 
Hide income 
Move way
Stop work
Rebel with a rebellion
70
Q

People react to cut taxes at low tax by

A

Revealing income
Moving into area
Starting work
Cooperating

71
Q

Historical examples of laffer curve

A

American revolution is an example
Before revolution the Boston tea party is also an example when the people of the colony threw tea into harbor because of unfair/high taxes from England and king
Taxation without representation

72
Q

Tanstaafl

A

The ain’t such thing as a free lunch

Nothing is free because someone had to pay for the said good down the line of creating it

73
Q

Hidden tax

A

Government get money in different way by either printing more money inflation or by borrowing money crowding

Austrian critic

Cut the real tax which is govt spending so there is real growth in future

74
Q

Tax purposes

A

So govt can collect revenue

Redistribution of income
– tax some to give to others

Manipulate values
– taxing something to discourage without taking item away and tax break to encourage

75
Q

3 tax types

A

Regressive
Proportional
Progressive

76
Q

Regressive tax

A

Rate of taxation decrease as income rises

Same tax amount for each person

Different tax rate for each person decreasing

77
Q

Proportional tax

A

Rate is same but as income increases amount taxes increases

Tax amount is different and rising

Tax rate is same rate

78
Q

Progressive tax

A

Greater the income the different the rate and amount paid

Tax amount is different rising

Tax rate is different rising

79
Q

Alternative to tax

A

Managing resources better

User fees (tax people who use it)

Lottery

Check off
Allows people to check off how much they meant to get taxes on of tax form

80
Q

4 tax objections

A

Excessive

Abusive and unfair

Manipulative of values

Wasteful and corrupting

81
Q

Tax objections

Excessive

A

Too much
Protect ability to get campaign contribution

Too many

Too complicated

82
Q

Abusive and unfair

A

IRS
Big cases big problems
Small cases small problems

They lie (can’t be held accountable) they promise to give money but they never do

Ex
Pres nixon gave enemy list to irs so they can audit them

83
Q

Manipulative of values

A

Tax high for some - discourage behavior

Tax low for some - encourage behavior

To discourage sinful behavior we have sin taxes

Like smoking and the cigarette tax
Congress spending subsidies Tabasco farm

Drinking alcohol tax congress spending at military

Working .income tax .unemployment care

84
Q

Wasteful and corrupt

A

People pay for things that they are uninterested in though taxes therefore wasteful

Moral objection
Go to jail for it paying tax or pay them and go to hell

Moral hazard
Alcohol drug addicts

Like

85
Q

Moral hazard

A

Govt policies that reward and encourage reckless behavior by removing risk

Disaster relief stuff like insurance

86
Q

What is debt

A

Govt give and take
Federal recipient and outlays rarely match current breakdown

Govt spend more then take in tax

Macro Economics (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions