Midterm

Question 1

Determinants of Market Demand

Answer 1

1. Tastes (desires for this and other goods)
   
   2. Income
   3. Other goods (their availability and price)
   4. Expectations (for income, prices, tastes)
      Number of buyers

Question 2

Determinants of Market Supply

Answer 2

Technology
Factor cost
Other goods
Taxes and subsidies
Expectations
Number of sellers

Question 3

Law of supply

Answer 3

larger quantities will be offered for sale at higher prices

Question 4

law of demand

Answer 4

quantity of a good demanded in a given time period increases as its price falls

Question 5

GDP equation

Answer 5

GDP = C + I + G + (X-M)

Question 6

Types of Unemploment

Answer 6

Seasonal
Frictional
Structural
Cyclical

Question 7

Frictional Unemployment

Answer 7

brief periods of unemployment by people changing employment or joining labor force

Question 8

Structural Unemployment

Answer 8

unemployment caused by a mismatch between skills (or location) of job seekers and the requirements of available jobs. (good for long term economy)

Question 9

Cyclical Unemployment

Answer 9

unemployment attributable to a lack of job vacancies, that is, to an inadequate level of aggregate demand.

Question 10

natural rate of unemployment

Answer 10

long-term rate of unemployment determined by structural forces in labor and market products.

Question 11

underemployment

Answer 11

People seeking full time paid employment who work only part time or are employed at jobs below their capacity.

Question 12

Circular Flow Model

Answer 12

households, firms, factor market, product markets

factor market: rents, wages, interest, profits

Question 13

Inflationary gap

Answer 13

Y > Yf

Question 14

Recessionary gap

Answer 14

Y < Yf

Question 15

Yd =

Answer 15

Yp - Tx + Tf

Question 16

Yp =

Answer 16

r + w + i + p