Brainscape's Knowledge GenomeTM

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


See full index

BEC > Macroeconomics > Flashcards

Macroeconomics Flashcards

1
Q

What is GDP?

A

Total dollar value (at current prices) of final goods and services produced within a country’s borders

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

What is GNP?

A

Total dollar value of goods and services produced by country’s residents

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

What is the most theoretically accepted solution for deflation?

A

Increase the money supply

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

What are measures of inflation?

A

Consumer Price Index - compares price of fixed basket of goods and services that a consumer might purchase in earlier period to later period

Producer Price Index - measures the average change over time in the selling prices received by domestic producers for their output. Prices included in the PPI are from the first commercial transaction for many products and some services.

GDP deflator - index used to convert nominal GDP into real GDP

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

What is demand-pull inflation?

A

Increase in prices caused by increase in aggregate demand (demand curve shifts upward)

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

What is cost-push inflation?

A

Increase in prices caused by increase in cost of producing (supply curve shifts inward)

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

What is the multiplier effect?

A

Increase in output (equilibrium GDP) =

Change in spending / MPS

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

What is an expansion?

A

Several years of increase economic production

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

What is a recession or contraction?

A

Several months or a few years of decreased economic production, typically two consecutive quarters of negative growth in real GDP

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

What is a depression?

A

A deep or long lasting recession

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

What is a recovery?

A

The early stages of an expansion, considered full expansion once peak from previous expansion is passed

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

What are examples of leading indicators?

A 
Stock market prices
Average hours worked per week
New orders for durable goods
Average initial claims for unemployment insurance
Building permits
Housing starts
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are examples of coincident indicators?

A

Industrial production

Manufacturing and trade sales

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

What are examples of lagging indicators?

A

Average prime rate for bank loans
Average duration of unemployment
Unemployment rate

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

What is frictional unemployment?

A

Unemployment as a result of normal turnover of workers

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

What is structural unemployment?

A

Unemployment due to a change in the demands for goods and services or technological advances

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

What is cyclical unemployment?

A

Unemployment due to changes in the business cycle

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

What is institutional unemployment?

A

Unemployment due to government restrictions

19
Q

What is NAIRU?

A

Non Accelerating Inflation Rate of Unemployment
Rate at which unemployment cannot fall without creating high inflation
NAIRU = Frictional + Structural Unemployment

20
Q

What is expansionary monetary policy?

A

Lower reserve requirements
Lower discount rate
Buy government securities through open market operations

21
Q

What is contractionary monetary policy?

A

Raise reserve requirements
Raise discount rate
Sell government securities through open market operations

22
Q

What is quantitative easing?

A

When Fed engages in open market operations and it only affects the money supply

23
Q

What is Classical Economic Theory?

A

No government intervention

24
Q

What is Keynesian Theory?

A

Use fiscal policy through taxes and spending

25
Q

What is Monetarist Theory?

A

Use monetary policy and focus on stable monetary growth, not stable interest rates

26
Q

What is Supply Side Theory?

A

Reduce taxes to increase economic production

27
Q

What is the Laffer Curve?

A

Shows that if tax rates are high enough, increasing tax rates further will not yield more revenue

28
Q

What is New Keynesian Theory?

A

Combines Keynesian and Monetarist theories

29
Q

What is Austrian Theory?

A

Low interest rates can lead to excessive borrowing

30
Q

What is a absolute advantage?

A

A country being able to produce a good at a lower cost than another country

31
Q

What is comparative advantage?

A

A country being able to produce a good at a lower relative cost than another country

32
Q

What are examples of natural barriers to international trade?

A

Transportation costs

Information costs

33
Q

What are the effects of trade restrictions?

A

Good for domestic producers of protected goods
Bad for domestic users - less supply
Bad for domestic users of exported goods
Bad for foreign producers
Good for foreign users of protected goods

34
Q

What is the Balance of Payments?

A

Summarizes a country’s transactions with other countries
Includes:
Current Account - Balance of Trade, Balance of Goods and Services, Net Interest and Dividends, and Net Unilateral Transfers
Capital Account - flow of investments

35
Q

What is formula for size of forward premium or discount?

A

Forward rate - Spot rate / Spot rate
x
Months in a year / Months in the forward period

36
Q

What causes a country’s currency to appreciate?

A 
Low inflation
High interest rates
Net exporter
Long term economic stability
Selling foreign reserves
37
Q

What is real GDP?

A

Total dollar value (at price-level adjusted prices of final goods and services produced within a country’s borders

38
Q

What is net domestic product?

A

Price of all goods and services produced by labor and property supplied by the nation’s residents less depreciation.

39
Q

What is potential GDP?

A

Maximum amount of production that could take place in an economy without putting pressure on the general level of prices

40
Q

What is included in the income approach to GDP?

A

Sum of all income earned in production of final goods and services:
Wages + interest + rents + business profits + adjustments for taxes and depreciation

41
Q

What is included in the expenditure approach to GDP?

A

Sum of all expenditures to purchase final goods and services:
Consumption + Private investment + Government expenditure + Net exports

42
Q

What is the Phillips Curve?

A

The relationship between unemployment rate and inflation

As unemployment rate falls, inflation rate increases at an increasing rate

43
Q

What is national income?

A

Net domestic product plus income earned abroad minus indirect business taxes

44
Q

What are the major components of real GDP?

A

Total worker hours

Labor productivity

BEC (14 decks)

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