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Macro Economics > Test 2 Flash Cards > Flashcards

Test 2 Flash Cards

0
Q

What are the three general kinds of taxes

A

Personal
Corporate
Retirement

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1
Q

What are the three kinds of business

A

Sole proprietorship
Partnership
Corporation

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2
Q

Describe the progressive tax system

A

As income increases the tax rate percentage paid increases

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3
Q

Describe the regressive tax system

A

As income increases the tax rate percentage paid decreases

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4
Q

Proportional tax system?

A

As income decreases/increases the tax rate percentage paid doesn’t Change known as a flat tax

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5
Q

What is the business cycle

A

The ups and downs of business activities or the fluctuations in business activities

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6
Q

What is GDP

A

The total dollar value of all final goods and services that are produced within the border of the country by businesses and residents of the country in a given economic year

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7
Q

What is GNP

A

The total dollar value of all final goods and services that are produced within and outside the border of the country by businesses and citizens of the country in a given economic year

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8
Q

What is the classical view

A
  • no govt
  • voluntary unemployment
  • long run equilibrium
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9
Q

Keynesian view

A
  • limited govt intervention in the economy
  • voluntary and non voluntary unemployment
  • short and long run equilibrium
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10
Q

Define civilian labor force

A

Individuals that are legally capable and willing to do civilian jobs

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11
Q

Unemployment

A

Part of the civilian labor force (that are capable and willing to do civilian jobs) that didn’t find jobs

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12
Q

What are the two ways of unemployment

A

Voluntary-quit

Non voluntary-fired

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13
Q

Define structural unemployment

A

Out of job due to lack of skill

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14
Q

Define fictional unemployment

A

Changing careers

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15
Q

Cyclical unemployment

A

Out of job due to low demand for the skills

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16
Q

Define target natural rate of unemployment

A

The rate of unemployment that may occur if the economy is performing at its potential equilibrium level of output

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17
Q

Define full employment

A

When the unemployment rate is equal two at most the natural rate of unemployment

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18
Q

Define underemployment

A

Available for full-time but working part-time hours

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19
Q

What is over employment

A

Working more than the full time requirements

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20
Q

What is inflation

A

When prices increase is up to 100% or purchasing power of money decreases

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21
Q

What is deflation

A

When prices go down or purchasing power of money is higher

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22
Q

What is hyper inflation

A

Inflation rate more than 100%

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23
Q

What is stagflation

A

Simultaneous increase in both the inflation rate and unemployment rate

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24
Q

Define price index

A

A measure of the price level

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25
Q

What is the consumer price index CPI

A

A weighted average price of a set or bundle of goods and services that are used daily by most consumers

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26
Q

What is the producer price index PPI

A

A weighted average price of a set or bundle of goods and services that are used daily by most producers

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27
Q

Define real income

A

Income adjusted for inflation based on the purchasing power

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28
Q

Define nominal income

A

Income not adjusted for inflation or income based on the current price level

29
Q

What is the GDP deflator

A

The weighted average price of all goods and services produced in an economy for a given economic this fiscal year

30
Q

What is the barter system

A

The coincidental medium of exchange of goods and services

31
Q

Define total demand deposit TD

A

Money taken to the bank for safekeeping

32
Q

Define required reserve ratio of

A

The percentage of the total deposit that must be kept at the bank

33
Q

Define required reserve

A

The dollar amount of the total deposit that must be kept in the vault of the bank

34
Q

Define excess reserves

A

The loanable funds for the dollar that is left to be loaned out after the required reserve has been taken from the total deposit

35
Q

Define simple money multiplier deposit or

A

The reciprocal of the required reserve ratio

36
Q

When changing the required reserve ratio of what happens in inflation

A

The required reserve ratio is increased

37
Q

When changing the required reserve ratio of what happened in recession

A

The required reserve ratio is decreased

38
Q

When changing the discount rate what occurs in inflation

A

The discount rate is increased

39
Q

When changing the discount rate what happens in recession

A

The discount rate is decreased

40
Q

In an open market operations what occurs in inflation

A

Federal Reserve sell bonds

41
Q

In an open market operations what occurs in recession

A

Federal Reserve buys bonds

42
Q

What is a bond

A

A instrument that becomes cash on and or after certain maturity right

43
Q

Define interest rate

A

Price of money charged or premium paid by regular banks to their customers

44
Q

Defined real interest rate

A

Rate adjusted for inflation rate based on purchasing hours

45
Q

Define nominal interest

A

Rate not adjusted for inflation or rate based on the current price level

46
Q

What is prime interest rate

A

The interest rate the banks charge to their trustworthy customers

47
Q

What is the discount rate

A

The rate the national Federal Reserve Banks charge members little banks when member banks borrow money from the national Bank

48
Q

What is the federal funds rate

A

The rate members little banks charge to each other when memory banks borrow money from each other

49
Q

What is the federal funds markets

A

The markets where the members banks borrow money from each other

50
Q

What causes cost push inflation

A

Increase in the cost of production

51
Q

What causes demand pull inflation

A

Increase in the demand for goods and services

52
Q

Define Dutch disease

A

Employee refusal to work due to higher marginal tax rates

53
Q

What is the Laffer curve

A

Graphical representation of the relationship between the percentage tax rate and each revenue generated at each tax rate

54
Q

What is structural budget deficit caused by

A

Poor management or the deficit that made her even if economy is producing at its potential equilibrium level of output

55
Q

What is the passive budget deficit

A

Deficit that may occur due to bad economic times or poor economic fluctuations

56
Q

Define nominal budget deficit

A

Deficit not adjusted for inflation or deficit based on the current level price

57
Q

Define real budget deficit

A

Deficit adjusted for inflation or Dubson based on the purchasing power of the money

58
Q

Define average propensity of savings

A

On average the percentage of each dollar earned that is saved

59
Q

Define average propensity of consumption

A

On average the percentage of each dollar earned that is consumed

60
Q

What is the first page of the aggregate supply curve

A

The Kinsey and stage price level doesn’t change in output level change

61
Q

What is the second stage of the aggregate supply curve

A

The classical stage price level change output level does not change

62
Q

What is the third stage of the aggregate supply curve

A

The intermediate stage price level change Output level change

63
Q

Define monetary policy

A

The means by which government manipulate the interest rates and money supply to achieve desirable results equilibrium

64
Q

Explain expansionary monetary policy

A

Use the one we are in recession increase money supply and decreased interest rates

65
Q

Explain contractionary monetary policy

A

Used when we are in in inflation decreased money supply and increased interest rates

66
Q

Define fiscal policy

A

The means by which the government manipulate the spending and interest rates to achieve desirable equilibrium result

67
Q

Describe expansionary fiscal policy

A

Is used mostly when we are in recession increase spending decrease taxes

68
Q

Describe contractionary fiscal policy

A

Use mostly when we are in inflation decrease spending increased taxes

69
Q

What does the Phillips curve do

A

Shows the graphical inverse relationship of the unemployment and inflation rates

Macro Economics (2 decks)

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