Brainscape's Knowledge GenomeTM

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


See full index

Investment Practice > macroeconomics > Flashcards

macroeconomics Flashcards

1
Q

Paradox of thrift

A

when savings create the opposite goal from what the consumer thinks - lower wages. savings are a leakage to the economy

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

if economy is in equilibrium

A

G + X + I = t + M + S

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

GDP

A

value of economic activity generated by factors of production from within the country’s domain

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

GDP represents

A

total market value of all goods and services

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

real GDP

A

year in year comparison at the base year’s prices

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

GDP at factor cost

A

refers to the value of firms output prior to any government interference

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

GDP at market prices

A

GDP takes into account subsidies and taxes

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

GDP expenditutre method

A

C + I (BY FIRMS IN CAPITAL GOODS) + G (excl transfer payments) + (x-M)

transfer payments: generate no output

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

GDP income method

A

employee compensation
proprietors income
rents
corporate profits
interest income
indirect business taxes
depreciation
net income of foreigners (income of foreigners in UK - income earned by UK’s abroad)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

GNP

A

GDP + net property income from abroad

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

net property income from abroad

A

> add in output of UK firms based overseas
deduct output of foreign firms based in the UK

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

net national product NNP

A

GNP - capital consumption (adjustment for depreciation if capital stock)

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

AD in a simple closed economy

A

AD = C + I
C + I = C + S

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

keynesian equilibrium

A

AD = GDP

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

consumption function

A

C =a + bY

a - autonomous consumption (necessary consumption)
b - marginal propensity to consume
Y - disposable income (Y -t)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

transmission machanism

A

effect of interest rates on consumption function

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

budget deficit

A

G>t
> helps incr AD
> expansionary policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

budget surplus

A

G < t
> reduce AD
> contracitonary or restrcitive policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

crowding out

A

expansionary policy leads to requirement to raise fiannce. issue more gilts with high yields but too expensive for other companies

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

Monetarist

A

supply and demand will find equilibrium. spending by government can lead to overcrowding

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

Austrian

A

utility
> diminishing marginal utility

22
Q

keynesian multiplier

A

> increase in income leads to a larger proportional increase in consumption

23
Q

MULTIPLIER

A

1/(1-MPC)
> ignores taxes
1/(1-(MPC(1-t))
> with taxes
1/(1-(MPC(1-t) + MPM)
> FULL MULTIPLIES
> TAES AND IMPORTS

24
Q

soft landing

A

economic growth but at slower rate

25
Q

economic recovery is led by a bull market

A

from trough to peak :
transportation and energy
credit cyclicals and technology
consumer growth and cyclicals
capital goods
financials

26
Q

helicopter money

A

bank increases money supply through printing more money
money released into:
> payment to government
> buying interest free debt from gvmnt
> payment to population

27
Q

negative interest rates used to

A

> increase investment and decrease saving
mattress money

28
Q

Basel I

A

banks required to hold capital to an amount of 8% of arisk-adjusted value of their assets

29
Q

Fisher equation

A

MV = PT
> M total amount of money in economy
> V velocity of circulation of money
> P avg price of each transaction made in the economy
> T totl numbr of transactions made over a period of time

30
Q

Real money supply

A

(M/P) = (T/V)

31
Q

Costs of inflation

A

> menu costs
shoe leather costs ( money left as deposits until needed. thus cash floats not left overnight thus retrieve cash every day from banks )

32
Q

demand pull

A

inflation cause by excess aggragate demand

33
Q

cost push

A

inflation caused by an incrase in prices of cots and wages

34
Q

unemployment rate

A

number of people registered as available to work in UK / total UK labour force

35
Q

types of unemployment

A

> frictional - people who an in between jobs and are unemployed or have disabilities
structural - decrease in demand within industry or localised area
Keynesian - drop in aggregate demand because of lack of flexibility with wages and prices (outside the control of workers or trade unions)
classical - when wages are priced too high resulting in fewer people being hired to complete the required tasks

36
Q

Narrow money

A

> M0 and M1
measures includes notes and coins in circulation and cash equivalents
monetary base

37
Q

Broad money

A

> accessibility to money has become less immediate
M2 adds short-term deposits to M1
M3 add longer-term deposits and money market funds
M4 = M3 + securities with maturities of <5yrs held by non-bank private sector (asset mngrs and insurance )
M4ex = M4 - deposits of international offshore financial centres

38
Q

CENTRAL BANKS

A

do not set inter-bank rates but can manage

39
Q

open market operations

A

> buying and selling securities on the open market
way that BoE controls short-term interest rates

40
Q

coincident indicators

A

occur at the same time as the economic activity, such as payroll or personal income less transfer payments and overall change in GDP

41
Q

Leading indicators

A

economic indicators which tend to change before the general economic activity, and so may sometimes be used as a predictor
> Stock market returns, consumer expectation, building permits and money supply.

42
Q

Lagging indicators

A

trail behind the general economic activity and include saving bank deposit levels and consumer debt levels, unemployment rate

43
Q

UK has an open economy

A

few barriers to trade

44
Q

UK balance of payments

A

Current account
> visible
> invisible
Capital account
UK investments in and outside UK

45
Q

sterilisation

A

pegged currency
budget deficit
=> buy back gvmnt securities in open market operations
when bank adjusts money supply to compensate balance of payments

46
Q

money supply

A

monetary base * money multiplier

money multiplier = 1/(reserve requirement)

47
Q

households and firms

A

provide factors of production and national income

national expenditure and national output

48
Q

when economy is in equilibrium

A

O = E = Y

49
Q

classical and keynesian economics

A

prices and wages are fully flexible
fixed

50
Q

economic recovery

A

real national output picks up

51
Q

monetary base

A

quantity of notes and coins in private hands and held by the banking sector

52
Q

Basel 2

A

> 2010
set up risk and capital requirements to ensure bank has adequate capital to cover risks when lending and investing
riskier banks more capital reserves

Investment Practice (17 decks)

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