Powerpoint stuff for mid term Flashcards
what was the market mechanism called before?
invisible hand
what does it mean to be capital intensive?
Capital is abundant and relatively low-cost.
what does it mean to be labor intensive?
Capital is unavailable or very expensive
what is the relative size of the U.S. economy?
United States produces about $15 trillion of output per year.
what are some factors that set demand behavior?
Taste for the good increases. Income increases. Price of a substitute rises. Price of a complement falls. Future prices are expected to rise. Number of buyers increases.
what are some factors that set supply behavior?
Technology Factor Costs. Taxes and subsidies. Expectations. Other goods. Number of sellers.
what are some positive externalities?
Society’s benefit > market benefit.
The market underproduces.
The government subsidizes to shift demand right.
what are some negative externalities?
Society’s cost > market cost.
The market overproduces.
The government restricts production to shift supply left.
what are intermediate goods?
goods or services purchased for use as an input in the production of final goods or in services.
what is value added?
the increase in the market value of a product that takes place at each stage of production.
what is nominal GDP
as measured with the effects of price changes included.
what is real GDP
the effects of price changes have been removed.
what is aggregate income in an economy?
total amount of income received by all factors of production in an economy in a given period.
what is aggregate output in an economy?
total amount of output produced and supplied in the economy in a given period
who makes up the labor force?
all persons age 16 and over who are either employed or actively seeking work.
who is out of the labor force?
those not working and not actively seeking employment.
Nominal income and real income difference?
You may get a raise (nominal income increases) – but if it does not rise as fast as inflation, your purchasing power decreases (real income falls).
what is demand-pull inflation?
results from excessive pressure to buy on the demand side of the economy.
what is cost push inflation?
results from higher production costs putting pressure on suppliers to push up prices.
Real income is measured in what?
constant dollars
nominal income is measured in what?
current dollars
Nominal GDP refers to what?
current dollar value of ouput
Real GDP refers to what?
inflation adjusted value of output
relative price?
price of one good in comparison with prices of other goods. Apples price may rise but oranges dont
average price vs relative price
relative price is on individual goods. avergae price of fruit can stay the same if the relative price of apples increases as long as the relative price of say oranges decreases
what is the consumer price index?
a mechanism for measuring the changes in the average price of consumer goods and services
trough
phase of the business cycle when the economy is at its lowest growth
