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ECON 101 > Macro economics > Flashcards

Macro economics Flashcards

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1
Q

macroeconomics

A

concerns the government and the economy as a whole

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2
Q

Gross domestic product (GDP)

A

total value of goods produced and services provided in a country during one year

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3
Q

nominal GDP

A

nominal GDP measures output using current market prices

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4
Q

real GDP

A

Changes as a result of inflation. Measures output using constant market prices

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5
Q

GDP deflator

A

measures the change in the annual GDP due to changes in price rates in the economy (actual dollars of nominal GDP divided by price index for that year)

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6
Q

purchasing power

A

the amount of things any given nominal money can buy at a given time (changes due to inflation and changes in real GDP)

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7
Q

2 balloon model of economy

A

bigger balloon is nominal economy smaller baloon is real GDP

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8
Q

GDP (Y)= C + I + G + NX

A

income = consumer spending + investments by consumers + government spending + net exports

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9
Q

goals of macroeconomics

A

stables prices, low unemployment, growth in real GDP

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10
Q

CPI (consumer price index)

A

measures the overall cost of goods and services purchased by a consumer (only measures the c)

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11
Q

indexation

A

adjustments by law or contract of a dollar amount to account for the effects of inflation

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12
Q

nominal interest rate

A

interest rate without correction for inflation

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13
Q

real interest rate

A

interest rate corrected for inflation

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14
Q

formula for income (y)

A

y= c (consumer spending) + s (savings) + t (taxes)

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15
Q

formula for disposable income (net of taxes)

A

y- t = c + s

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16
Q

organized financial system

A

banks are confidential (do not advertise if you are a saver or a borrower)

17
Q

financial markets

A

institutions through which individuals who want to save can directly supply funds to a person who wants to borrow money (bond markets and stock markets)

18
Q

bond

A

A certificate of IOU; bonds are investments in debt

19
Q

stocks

A

a way to purchase part of a company

20
Q

3 types of unemployment

A

cyclical (due to business cycle)
structural (labor supply exceeding labor demand)
natural (quit or let go)

21
Q

frictional unemployment

A

natural and structural

22
Q

how does the government adopt policies to reduce unemployment

A

structural- is reduced by job training and school
cyclical- reduced by fiscal and monetary policy
natural- accepted cost no reduction attempt

23
Q

money supply

A

consists of currency and demand deposits

24
Q

money functions

A

medium of exchange
store of value
unit of account

25
Q

evolution of use of money

A

commodities (bartering scare materials for goods)
Receipts (proof of purchase)
Fiat (promise to pay)

26
Q

money creation principles

A

banks lend amounts equal to excess reserves
reserves have to stay within the federal reserve
eventually make their way back as deposits

27
Q

federal reserve

A

central bank of the united states

28
Q

money multiplier

A

banks loan or invest excess reserves to earn more interest- increase in money supply

29
Q

long run aggregate supply (LRAS)

A

curve that shows the relationship between price level and real GDP

30
Q

short run aggregate supply (SRAS)

A

relationship between planned national output (GDP) and the general price level

31
Q

fiscal policy

A

tax and spending policies of the federal government
AD=Y=GDP

32
Q

Monetary Policy

A

Actions of central banks to achieve macroeconomics goals such as price stability, employment, and economic growth
m x v = p x Q = nominal GDP

33
Q

example of fiscal policy

A

government can lower taxes and raise government spending during a recession

ECON 101 (2 decks)

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