Theme 3 notes

Question 1

what is short run ?
what is long run?

Answer 1

short run is when at least one factor of production is fixed
long run is when at least one factor of production is variable

Question 2

what is money illusion ?

Answer 2

when people view their wealth and income in nominal dollar terms, rather than in real terms

Question 3

what is a faeture of a public good ?

Answer 3

non-rivalrous
non-excludibility

Question 4

what is the impaxt of the marshall lerener condition holding ?

Answer 4

an exchange rate deprectiation will only reduce the current account deficit

Question 5

what is allocative effeciency , dynamic , x-effeciency and productive efficiency?

Answer 5

allocative - when p=AR

dynamic - this is when MR=MC

x-effeciency - this is when the AC incearse

productive-this is when you are producing at the lowest point on AC curve

Question 6

what is narrow money , what is broad money?

Answer 6

narrow- commercial banks deposits at the bank of england

broad- narrow money + liquid assets

Question 7

what is a negative output gap ?
what is a positive ouptu gap?

Answer 7

a negative output gap is when there is spare capacity in the economy,
perhaps due to weak demand

Question 8

what is in the HDI

Answer 8

• years of schooling
  -birth rate
  life expectancy at birth
  GNI

Question 9

what is an automatic stabilizer?

Answer 9

Automatic stabilizers are ongoing government policies that automatically adjust tax rates and transfer payments in a manner that is intended to stabilize incomes, consumption, and business spending over the business cycle.

Question 10

types of taxtion

Answer 10

progressive
regressive
proportional