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jeremy harmon > Macro Quiz 2 > Flashcards

Macro Quiz 2 Flashcards

1
Q

GDP

A

Total output or total income or total spending in entire economy

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2
Q

GDP per capita

A

Average income per person

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3
Q

Recession

A

Significant decline in GDP or economic activity

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4
Q

Depression

A

A large recession

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5
Q

Unemployment

A

Those wanting a job and don’t want one

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6
Q

Labor Force

A

All employed and unemployed workers

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7
Q

Discouraged workers

A

People who want to work but give up trying because of poor labor market

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8
Q

Cyclical Unemployment

A

Unemployment related to the business cycle

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9
Q

What is an example of cyclical unemployment?

A

Recession

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10
Q

Structural Unemployment

A

Mismatch of what employers are looking for and what employees have

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11
Q

What is an example of structural unemployment?

A

Manufacturing jobs

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12
Q

Frictional Unemployment

A

Includes people that are just entering the workforce or people who leave their jobs and look for better ones

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13
Q

What does C stand for in C + G + (I-E) + i Equation?

A

Consumer spending

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14
Q

What does G stand for in C + G + (I-E) + i Equation?

A

Government Spending

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15
Q

What does (I-E) stand for in C + G + (I-E) + i Equation?

A

Net Exports

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16
Q

What does i stand for in C + G + (I-E) + i Equation?

A

Investment

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17
Q

Output

A

All goods and services in the economy

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18
Q

What are the 5 shortcomings of GDP?

A

Does not explain technological change
Does not show inequality
Does not show time cost
Does not include pollution as a result of activity
-Just because we produce more, does not mean people are better off

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19
Q

What is an example of GDP not accounting for technological change?

A

Free apps

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20
Q

What is an example of GDP not accounting for inequality?

A

Many people can be in poverty despite a high GDP

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21
Q

What is an example of GDP not accounting for time cost?

A

I cleaned the dishes but that value is not included

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22
Q

What is an example of the GDP shortcoming of when we produce more does not mean we are better off?

A

Hurricanes result in many new homes

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23
Q

Inflation

A

When prices increase

24
Q

Inflation Rate

A

the percent change in prices

25
Q

What are 3 reasons that Aggregate Demand is downward sloping?

A

Interest rate effect
International effect
Money wealth effect

25
Q

Interest Rate Effect

A

If price increases, then the value of the dollar decreases because people cannot buy as much

25
Q

International effect

A

If price increases in the United States, exports decrease because goods are more expensive relative to other countries. Therefore, imports increase.

26
Q

Recessionary Gap

A

When actual output is below potential output

27
Q

Inflationary Gap

A

When actual output is above potential output

28
Q

What is an example of a countercyclical policy?

A

Reducing government spending and raising taxes during a boom

29
Q

What does marginal propensity to consume stand for?

A

MPC

30
Q

Marginal propensity to consume

A

How much of each dollar is spent

- As income increases, MPC decreases

31
Q

Multiplier effect

A

Change in government spending leads to a change in output

32
Q

What 4 things affect Aggregate Demand?

A

Consumer Spending
Investment
Government Spending
Net Exports

33
Q

What happens to government spending when there is an increase in price level?

A

The government will reduce spending to control price level during the boom

34
Q

What are 3 ways GDP per capita fails as a measure of well being?

A

Does not show economic inequality
Does not show social inequality
Does not account for pollution

35
Q

Why doesn’t GDP per capita show economic inequality?

A

Can still be a large number of people in poverty even if GDP per capita is high

36
Q

Why doesn’t GDP per capita show social inequality?

A

African Americans are often discriminated in United States despite high GDP per capita

37
Q

Why doesn’t GDP per capita account for pollution?

A

In China the air is really polluted regardless of GDP per capita

38
Q

Growth

A

Increases in output and income

39
Q

As a result, what does growth increase?

A

Standard of living

40
Q

When growth increases income, what 2 positive things happen?

A

Can afford more things

Results in higher life expectancy

41
Q

What are the 5 sources of growth?

A 
Growth compatible institutions
Investment and Accumulated Capital
Available Resources 
Technological Development 
Entrepreneurship
42
Q

What are 2 examples of growth compatible institutions?

A

Markets

Private Ownership

43
Q

Growth Compatible Institutions

A

When people gain from growth, they are more likely to work harder

44
Q

Investment and Accumulated Capital

A

Taking savings and putting them towards something in the hopes of getting a greater return

45
Q

What is an example of Investment and Accumulated Capital?

A

Stock Market

46
Q

Available Resources

A

The more resources you have, the more you can produce

47
Q

Technological Development

A

When technology develops, it allows resources to be used more efficiently

48
Q

Entrepreneurship

A

Ability to get things done

49
Q

What is an example of Entrepreneurship?

A

Starting a business

50
Q

Institutions

A

Formal and informal patterns, rules and regulations of behavior

51
Q

What are 4 examples of institutions?

A

Investing
Technological Advancements
Markets
Entrepreneurship

52
Q

Human Capital

A

People ability to perform or produce something

53
Q

Physical Capital

A

Consists of land, buildings, equipment or machines

54
Q

What does physical capital enable?

A

Enables production process

55
Q

Social Capital

A

The need of others to produce a good

jeremy harmon (108 decks)

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