VWL Flashcards

1
Q

Capital

A

Things that are used in the production of goods and services (money, workforce..)

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2
Q

Factors of production

A

Inputs into the process of production

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3
Q

Production

A

Process of transforming resources into goods & services

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4
Q

Input / Resources

A

Something provided by nature that is used to satiafy human wants

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5
Q

Opportunity Cost

A

Best alternative to give up

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6
Q

Output

A

Final or intermediate product

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7
Q

Absolute advantage

A

If he produces the same good using less resources

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8
Q

Comparative advantage

A

If he produces the good at lower opportunity cost

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9
Q

Production Possibility Frontier

A

Graph that shows all goods and services that can be produced if all societys ressources are used

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10
Q

Actors of a closed laissez fair economy

A

Entrepeneur (make business)

Households (consuming)

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11
Q

Markets of a closed laissez faire economy

A

Product/Output Market (Exchange of products)

Input market (Ressource exchange)

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12
Q

Markets

A

Labour market

capital market

land market

goods and services market

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13
Q

Quantity demanded depends on:

A
Price of product
Income of Household
accumulated wealth of household
prices of other products
taste and preferences
expectations about future
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14
Q

Law of demand

A

Substitution effect (buying more expensive goods intstead of cheaper ones)

Income effect (Less income = less consumption)

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15
Q

Demand Normal goods

A

Demand rises/falls when income inc./decr.

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16
Q

Demand inferior goods

A

Demand falls when increase in income

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17
Q

Giffen good

A

Price rises -> demand rises

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18
Q

Substitute

A

Replacement goods when the price of another good increases

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19
Q

Perfect substitute

A

Identical product

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20
Q

Complementary goods

A

Goods that go together

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21
Q

Quantity Supplied

A

The amount of a product that a firm would be willing and able to offer for sale at a particular price at a certain time

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22
Q

Law of supply

A

Price increase -> more supply

Price increase -> less supply

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23
Q

Equilibrium Supply/Demand

A

When quantity demanded = quantity supplied

Then no tendence for a price change

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24
Q

Excess demand/shortage

A

Quantity demanded > Quantity supplied

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25
Q

Excess supply/surplus

A

Quatity supplied > Quantity demanded

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26
Q

Price rationing

A

Describes how quantity supplied effects the price

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27
Q

Price ceiling

A

Government decides a maximum limit of a product

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28
Q

Price floors

A

Do not get a good become to cheap -> labor

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29
Q

Consumer surplus

A

Difference between max value a consumer would pay for a good and its current price

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30
Q

Producer surplus

A

Difference of current market price and production rest of a product

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31
Q

Deadweight loss

A

Lost consumer and producer surplus that would occure in an efficient market

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32
Q

Elasticity

A

The ratio of the percentage change in one variable to the percentage change in another variable

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33
Q

Price elasticity of demand

A

The ratio of thr percentage of change in quantity demanded to the percentage of change in price

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34
Q

Utility

A

The satisfaction a product brings relatively to alternative product -> bais of choice

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35
Q

Marginal utility

A

Addition satisfaction by one more product unit

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36
Q

Total utility

A

Total satisfaction by a product

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37
Q

Law of diminishing marginal utility

A

The more you consume of one good the less satisfaction it will generate

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38
Q

Profit

A

Total revenue (Quantity * price) - Total cost

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39
Q

Short run

A

Period of time in which firms can neither enter or exit an industry and the firm is operatingunder a fixed scale

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40
Q

Long run

A

Period of time within no fixed factors of production. They can enter exit markets and increase/decrease scale of operations

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41
Q

Marginal product

A

Additional output by adding one more specific input unit

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42
Q

Law diminishing returns

A

je mehr sich marginal product erhöht, desto geringer wird steigung

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43
Q

Total cost

A

Fixed + variable cost

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44
Q

Average fixed cost (AFC)

A

Total fixed cost / quantity of output

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45
Q

Marginal cost

A

Increase in total variable cost by producing one more unit of a good

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46
Q

Average variable cost (AVC)

A

TVC / quantity output

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47
Q

Marginal revenue (MR)

A

Additional revenue that a firm takes by increasing output of one product

Perfect competition: MR = P

48
Q

What does firms want

A

Firms want to maximize the difference between the total revenue and total cost

49
Q

Actors in Macro

A

Firms, households, goverment, rest of the world

50
Q

Aggregiate behaviour

A

Behaviour of all households and firms

51
Q

Sticky prices

A

Prices that do not always adjust rapidly to miaintain equality between quantity supplied and demanded

52
Q

Major concerns of macro

A

Inflation

Unemployment

Output growth

(2 + 3 go well together)

53
Q

Inflation

A

Increase of overall price niveau

54
Q

Hyperinflation

A

Very rapid increase of the overall price level

55
Q

Deflation

A

Decrease of the overall price level

56
Q

Disinflation

A

Decrease of inflation rate

57
Q

Aggregate output

A

Total quantity produced during one period in one country

58
Q

Reccession

A

Decline of output -> 2 consecutive quarters

59
Q

Policies that the government uses to influence the macroeconomy

A

Fiscal policy (taxes, expenditures)

Monetary policy (Central bank tools to control quantity of money)

Growth or suppky (side policies)

60
Q

Transfer payment

A
Cash payment from government to people.
Welfare payments (Hartz 4 etc.)
61
Q

3 Market arenas

A

Goods and service market (firms supply, firms/gov(hh demand)

Labor markt (hh supply, firms/gov demand)

Money market (hh demand + supply, firms/gov(restWorld also borrow and lend)

62
Q

Treasury bonds

A

Staatsanleihen

63
Q

Corporate bonds

A

Unternehmensanleihen

64
Q

Business Cycle

A
Through
Expansion
Peak
Recession
Through
65
Q

GDP (Gross domestic product)

A

Total market value of all final goods/services in one period + one economy

66
Q

GNP (Gross national product)

A

Total market value off all final goods/services produced by a production owned by a countries citizen, regardless of where the good was produced

67
Q

Net investments

A

Gross investment- depreciation

68
Q

Government consumption/investment

A

Expenditures by government for final goods/services

69
Q

Nominal GDP

A

With inflation

70
Q

Real GDP

A

without Inflation

71
Q

GDP deflatior

A

Nominal GDP / Real GDP

72
Q

Problems of fixed weights/prices

A

Structural changes in economy

Substitution effect of increasing prices

Supply shifts -> decrease in price + increase in supply

73
Q

GNI (Gross NAtional income)

A

GNP converted in dollar without inflation

74
Q

Aggregate output

A

Quantity of goods/services produced of an economy in one period

75
Q

Aggregate income

A

Total income recieved by factors of production in one period

76
Q

Savings

A

Aggregate income - Consumption

77
Q

Marginal propensity to consume (MPC)

A

How much would household spend of one extra dollar

78
Q

Marginal propensity to save (MPS)

A

How much to save out of 1$ extra

79
Q

MPC + MPS =???

A

1

80
Q

Investments

A

Purchases by firms of new buildings/equipment or more inventory that increase the companys capitaö

81
Q

Change in Inventory

A

Production - Sales

82
Q

Planned aggregate expenditure

A

The amount of money an economy plans to spend

83
Q

Equlibrium Planned aggregate expenditure

A

When there is no tendency for change, when planned expenditure is equal to output

84
Q

Net taxes

A

taxes paid by firms / hh

85
Q

Discretionary fiscal plicy

A

Changes in taxes or spendings influenced by the government

86
Q

Budget deficit

A

G (Gov. spending) - T (taxes)

87
Q

Equilibrium output

A

Output equals expenditure (leakage (Savings + taxes) equals injenctions (Investments + gov. spending)

88
Q

Federal debt

A

Total amount owed by government

89
Q

When economy is expanding

A

Less Transfer payments

Inflation often rising -> usually gov spends more

90
Q

Automatic stabilizers

A

Anticyclic spending of gov. related to current state of the economy

91
Q

Fiscal drag

A

Negative effect of higher tax brackets for households during economy expansions

92
Q

Full Employment budget

A

Federal budget at full employment level

93
Q

Structural defiicit

A

Deficit that remains at full employment

94
Q

Cyclical deficit

A

Deficit that occurs because of a downturn in business cycle

95
Q

What is Money

A

Anything that is generally acceoted as a medium of exchange

  • > Means of payment
  • > medium of exchange
  • > store of value
  • > Unit of account
96
Q

Commodity money

A

Kupermünzen -> haben reellen wert

97
Q

Token

A

Scheine (kein reeller wert)

98
Q

Legal tender

A

Gesetzliches Zahlungsmittel

99
Q

Currency debasement

A

decrease in value of money by increasing supply

100
Q

Transaction money

A

Money that can be directly used

101
Q

Broad money

A

Liquid money + less liquid money

102
Q

Networth

A

Assets - Liabilities (Verbindlichkeiten)

103
Q

Reserves

A

Deposits that a bank has to deposit at the central bank

104
Q

Excess reserves

A

Actual reserves - required reserves

105
Q

Task of Fed

A

Clearing interbank payment

Providing fonds for banks when no one else does it

106
Q

Tools of the central bank

A
  1. changing required reserve ratio (RR hoch = less money supply und anders rum)
  2. Changing discount rate
  3. Engaging in open market operations
107
Q

Discount rate

A

Leitzins

Interest rate for from CB to other banks

108
Q

Open market operations

A

Purchase/Sale of government securities by CB to expand/contract the reserves and the money supply

109
Q

T Bills

A

Staatsanleihen

110
Q

Interest

A

Fee that borrowers pay to lenders

111
Q

Transaction motive

A

Main motive to hold money, because of buying somthing

112
Q

Speculation motive

A

Falling interest rate -> rising bond values
Rising interest rate -> falling bond values

When interest rates are high, investors would like to buy bonds to speculate that interest falls and bonds rises

113
Q

Determinant of money demand

A

Interest rate

Dollar volume of transactions = output/ price level

114
Q

CB Tight monetary policy

A

COntract money + restrain economy

115
Q

CB Easy Monetary policy

A

Expand money + stimulate economy