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Test 1 Flashcards

1
Q

Scarcity

A

Evers to the limited nature of society’s resources, given their unlimited wants and needs

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2
Q

Economics

A

The study of how people allocate their limited resources to satisfy their unlimited wants

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3
Q

Macroeconomics

A

The study of the overall aspects and workings of an economy

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4
Q

Microeconomics

A

The study of the individual units that make up an economy

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5
Q

Incentives

A

Factors that motivate a person to act or exert effort

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6
Q

five foundations of economics

A

Incentives, trade-offs, opportunity cost, marginal thinking, trade creates value

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7
Q

Types of incentives

A

Positive, negative, direct, indirect

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8
Q

Unintended Consequence

A

Unplanned result of an incentive

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9
Q

Trade-off

A

Choosing between two options. China shut down factories for cleaner air

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10
Q

Opportunity Cost

A

The highest-valued alternative that must be sacrificed in order to get something else. Driven by trade-offs

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11
Q

Economic Thinking

A

Requires a purposeful evaluation of the available opportunities to make the best decision possible

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12
Q

Marginal Thinking

A

Requires decision-makers to evaluate whether the benefit of one more unit of something is greater than its cost

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13
Q

Markets

A

Bring buyers and sellers together to exchange goods and services

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14
Q

Trade

A

The voluntary exchange of goods and services between two or more parties

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15
Q

Comparative Advantage

A

Refers to the situation where an individual, business, or country can produce at a lower opportunity cost than a competitor can

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16
Q

GDP

A

The market value of all final goods and services produced within a country during a specific period

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17
Q

Three uses of GDP

A

Measuring living standards, measuring economic growth, determining whether an economy is experiencing recession or expansion

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18
Q

Per Capita GDP

A

GDP per person used to measure living standards

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19
Q

Market Value Equation

A

Price x quantity

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20
Q

Inflation

A

The growth in the overall level of prices in an economy

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21
Q

Real GDP

A

GDP adjusted for changes in prices

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22
Q

Economic Growth

A

Measured as the percentage change in real per capita GDP

Starts with GDP but adjusts for inflation and population growth

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23
Q

Recession

A

A short-term economic downturn

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24
Q

Great Recession

A

US recession lasting from December 2007 to June 2009

25
Business Cycle
Short-term fluctuation in economic activity Peaks and troughs Full cycles run from peak to trough to peak Recovery lasts from the trough to the time you recover the GDP you lost; not necessarily all the way to the peak
26
Economic Expansion
Phase of the business cycle during which the economy is growing faster than usual From trough to peak
27
Economic Contraction
A phase of the business cycle during which the economy is growing more slowly than usual From peak to trough
28
Service
An output that provides benefits without the production of a tangible product A broad term that encompasses both low and high level jobs Majority of the US GDP is service output
29
Intermediate Good
A good that firms repackage or bundle with other goods for sale at a later stage
30
Final Good
A good sold to final users. The completed good
31
GNP
The output produced by workers and resources owned by the residents of that nation \ *GDP only includes goods and services produced domestically
32
GDP Equation
GDP = C + I + G + NX
33
Consumption
The purchase of final goods and services by households, excluding new houses
34
Investment
Private spending on tools, plan, and equipment used to produce future output Also includes all purchases by businesses that add to their inventories
35
Government Spending
Includes spending by all levels of government on final goods and services Does not include transfer payments such as welfare or unemployment insurance
36
Net Exports
Exports - imports
37
Nominal GDP
Measured in current prices, not adjusted for inflation
38
Price Level
Index of the average prices of goods and services throughout the economy
39
GDP Deflator
Measure of the price level that includes prices of the final goods and services included in GDP
40
Real GDP Equation
Nominal GDP / price level x 100
41
Percent Change Equation
(New value - old value) / old value x100
42
Unemployment
Occurs when a worker who is not currently employed is searching for a job without success
43
Unemployment Rate (u)
The percentage of the labor force that is unemployed
44
Three Types of Unemployment
Structural, frictional, cyclical
45
Structural Unemployment
When the structure of the economy changes Consumer demands shift, new technology, geographical changes
46
Creative Destruction
Occurs when the introduction of new products and technologies leads to the end of other industries and jobs
47
Frictional Unemployment
Unemployment caused by delays in matching available jobs with workers "Regular" unemployment Time costs are present in the process of trying to find a good job or good worker
48
Unemployment Insurance
A government program that reduces the hardship of joblessness by guaranteeing that employed workers receive a percentage of their former income while unemployed
49
Cyclical Unemployment
Unemployment caused by recession No known timeframe Driven by the business cycle
50
Natural Rate of Unemployment (u*)
The typical rate of unemployment that occurs when the economy is growing normally (what the unemployment should be)
51
Full Employment Output (y*)
The output level produced in an economy when the unemployment rate is equal to its natural rate Y=y* if u=u*
52
Unemployment Rate Equation
U= number employed / labor force x 100
53
Labor Force
Includes people who are already employed or actively seeking work.
54
NOT in the Labor Force
``` Jobless, not looked for work in last 4 weeks Retired Students Institutionalized Stay-at-home parent ```
55
Relevant Population
Non-institutionalized Civilian Over 16
56
Discouraged Workers
Those who are not working, have looked for a job in the last 12 months and are willing to work, but have not sought employment in the past 4 weeks
57
Underemployed Workers
Those who have part-time jobs but would prefer to work full-time
58
Labor Force Participation Rate
The percentage of the population that is in the labor force
59
Labor Force Participation Rate Equation
Labor force / population x 100

Macro Econ (1 decks)

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