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ap macroeconomics > macro mock > Flashcards

macro mock Flashcards

1
Q

what kind of economy does the usa have?

A

mixed economy

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2
Q

what are the four factors of production?

A

land, labor, capital, and entraperneurship

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3
Q

define positive economics

A

objective, verifiable statements that describe the economy as it really is

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4
Q

define normative economics

A

subjective statements that attempt to make prescriptions about how the economy should work

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5
Q

define an economic depression

A

deep and prolonged economic downturn

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6
Q

define an economic recession

A

falling output and rising unemployment

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7
Q

define an economic expansion

A

rising output and falling unemployment

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8
Q

what does the labor force consist of

A

employment + unemployment

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9
Q

what is inflation

A

a rise in the overall price level

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10
Q

define deflation

A

a fall in the overall price level

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11
Q

what does a bowled shape ppc model mean

A

increasing opportunity cost

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12
Q

what does a linear shape ppc model mean

A

constant opportunity cost

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13
Q

what are on the x and y axises of a ppc model

A

on the y-axis, capital goods

on the x-axis, consumer goods

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14
Q

define comparative advantage

A

opportunity cost for producing g & s is lower than it is for other people

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15
Q

define absolute advantage

A

can produce more of a good or service than others

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16
Q

what are on the x and y axises of a supply/demand model

A

on the y-axis, price (p)
on the x-axis, quantity (q)
demand’s downward sloping
supply’s upward sloping btw!!

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17
Q

when will there be a movement along the demand curve

A

when there is a change in the price of that g or s

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18
Q

when will there be a shift of the demand curve

A 
change in related goods or services
change in income
change in taste
change in the number of consumers
change of expectations
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19
Q

define substitutes

A

two goods for which an increase in the price of one leads to an increase in the demand for the other

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20
Q

define complements

A

two goods for which an increase in the price of one leads to a decrease in the demand for the other

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21
Q

define normal goods

A

a good for which an increase in income leads to an increase in demand

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22
Q

define inferior goods

A

a good for which an increase in income leads to a decrease in demand

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23
Q

law of supply

A

when the price of a good or service increases, the quantity supplied increases

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24
Q

when will there be a movement of the supply curve

A

a change in the price of that g or s

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25
Q

when will there be a shift of the supply curve

A 
change in input prices (labor, oil, used to produce g/s)
change in technology
change in expectations
change in the number of producers
changes in the taxes and subsidies
change in the price of related g & s
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26
Q

substitutes in production

A

when the price of one good increases, the supply of the other decreases

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27
Q

complements in production

A

when the price of one good increases, the supply of the other increases

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28
Q

look at image of circular flow diagram of the economy

A

thanks sweetie pls continue

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29
Q

what does disposable income (yd) consist of

A

income + government transfers - taxes

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30
Q

what does gross domestic product (gdp) consist of

A

y = consumption/consumer spending + investment spending + government spending + net exports (exports - imports)

31
Q

what does gdp include

A

domestically produced final g & s including capital goods, new construction, and changes to inventories

32
Q

what does gdp not include

A

intermediate g & s, inputs, used goods, financial assets (stocks, bonds, etc.), and foreign produced g & s

33
Q

what does total factor income consist of

A

wages + interest payments + rent + profits

34
Q

define real gdp and its weaknesses

A

total value of final g & s produced in an economy during a given year, calculated by adjusting prices to those of a baseline year and it doesn’t include things that cause happiness or unhappiness

35
Q

define nominal gdp

A

total value of final g & s produced in an economy during a given year, calculated with prices of the current year ouput

36
Q

what is gdp per capita

A

real gdp / population

37
Q

what does private savings consist of

A

disposable income - consumer spending

38
Q

what does the labor force participation rate consist of

A

labor force / population aged 16+

39
Q

what does the unemployment rate consist of

A

unemployed / labor force

40
Q

define discouraged workers

A

non-working people who have given up (like me ha)

41
Q

define marginally attached workers

A

would like to work but are not currently looking

42
Q

define underemployed workers

A

people who work part-time

43
Q

the above groups are not counted as unemployed

A

this be me in one year i tell ya

44
Q

relationship between gdp and unemployment

A

when gdp rises, unemployment falls

when gdp falls, unemployment rises

45
Q

define frictional unemployment

A

unemployment due to time spent in job search trying to match yo skills to le job

46
Q

define structural unemployment

A

more people searching for jobs than there are jobs available HOLLA

47
Q

what is the natural rate of unemployment

A

frictional + structural

48
Q

define cyclical unemployment

A

deviation of actual unemployment rate from natural rate of unemployment due to business cycle

49
Q

what causes changes in the natural rate of unemployment

A

changes in labor force characteristics
changes in labor market institutions
changes in government policies

50
Q

how to calculate real wage and real income

A

real wage: wage rate / price level

real income: income / price level

51
Q

how to calculate inflation rate

A

price level year 2 - price level year 1 / price level year 1 x 100

52
Q

define shoe leather costs

A

increased costs of transactions caused by inflation

53
Q

define menu costs

A

real costs of changing listed prices

54
Q

define unit-of-account costs

A

arise from the way inflation makes money a less reliable measurement

55
Q

define disinflation

A

process of bringing inflation rate down

56
Q

how to calculate price index

A

comb in a given year / comb in base year x 100

57
Q

how to calculate gdp deflator

A

nominal gdp / real gdp x 100

58
Q

what does real interest rate consist of

A

nominal IR - inflation rate

59
Q

what does the mpc consist of

A

change in consumption / change in disposable income

60
Q

what does the mps consist of

A

1 - MPC

61
Q

what do we assume when using the multiplier

A

that producers are willing to supply additional output at fixed prices, interest rates are as given, and that government spending doesn’t happen along with no taxes and zero exports and imports

62
Q

what is the multiplier equation

A

1/MPS or 1/(1-MPC)

63
Q

what is the consumption equation

A

consumer spending = autonomous consumer spending + mpc x disposable income

64
Q

what causes shifts in the aggregate demand curve

A 
changes in expectations
changes in wealth
size of existing stock of physical capital
fiscal policy
monetary policy
65
Q

relationship between unemployment and wages

A

as unemployment increases, wages decrease &&&& vice versa

66
Q

what causes shifts in the aggregate supply curve

A 
commodity prices (oil & gas)
nominal wages (if increase, shifts left & vice versa)
67
Q

how are wages in the long run

A

fully flexible

68
Q

define stagflation

A

inflation + stagnant/falling output (rising unemployment)

69
Q

how to calculate the output gap

A

actual output - potential output /potential output x 100

70
Q

what is fiscal policy

A

government tax and spending

71
Q

what does expansionary fiscal policy consist of

A

increase in government purchases of g & s
cut in taxes
increase in government transfers

72
Q

what does contractionary fiscal policy consist of

A

decrease in government purchases of g & s
increase in taxes
decrease in government transfers

73
Q

what is the tax multiplier

A

mpc / mps

74
Q

what is the spending multiplier

A

1 / mps

ap macroeconomics (1 decks)

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