Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Macroeconomics > Week 1 > Flashcards

Week 1 Flashcards

1
Q

paradox of thrift

A
  • when households anticipate a recession they cut spending to prepare
  • decrease in spending leads to an increase in lay-offs
  • causes a recession - self-fulfilling prophesy
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

self-regulating economy

A
  • popular pre-1930s
  • economic problems will be solved without government intervention through the invisible hand
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Keynesian economics

A
  • popular post-1930s
  • economic slumps can be mitigated through government intervention
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

monetary policy

A

uses changes in the quantity of money to change interest rates and affect overall spending

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

fiscal policy

A

uses changes in government spending and taxes to affect overall spending

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

recession/contraction

A

period of economic downturn, decreased output and employment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

recovery/expansion

A

period of economic upturn, increased output and employment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

business cycle

A

short run alternation between recessions and expansions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

business cycle peak

A

point at which the economy turns from expansion to recession

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

business cycle trough

A

point at which economy turns from expansion to recession

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

business cycle graph

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

inflation

A

overall increase in price level

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

deflation

A

overall fall in price level

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

price stability

A

overall price level changes slowly or not at all

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q
A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

short run relationship between inflation and business cycle

A
  • economy depressed: increases unemployment, decreases inflation
  • economy booming: decreases unemployment, increases inflation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

long run relationship between inflation and business cycle

A

inflation mainly determined by changes in money supply

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q
A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

problem with inflation

A

discourages people from holding onto cash because value decreases

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

problem with deflation

A

encouraes people to hold onto cash because more attractive than investment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

national income and product accounts (NIPA)

A
  • measures UK’s economic performance
  • compares UK income/output to other nations
  • tracks economic conditions throughout business cycle
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

consumer spending

A

household spending on goods and services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

stock

A

share in ownership of company held by shareholder

24
Q

bond

A

borrowing in form of IOU that pays interest

25
Q

government transfer

A

payment by government to individuals for which no goods and services are provided in return

26
Q

disposable income

A
  • income + government transfers - taxes
  • available income to spend or save
27
Q

expanded circular flow diagram

A
28
Q

private savings

A

disposable income - consumer spending

29
Q

financial markets

A
  • banking, stock, bond marketws
  • channel private savings and foreign lending into investment, government and foreign borrowing
30
Q

government borrowing

A

total amount of funds borrowed by federal, state and local government in financial markets

31
Q

government purchase of g+s

A

total expenditure on g+s by federal, state, and local governments

32
Q

exports

A

g+s sold to other countries

33
Q

imports

A

g+s bought from other countries

34
Q

inventories

A

stocks of goods and raw materials held to facilitate business operations

35
Q

investment spending

A

spending on productive physical capital and on changes to inventories

36
Q

GDP

A

market value of all final g+s produced in a country in a year

37
Q

what are the 3 ways to calculate GDP?

A
  1. total value of all final g+s produced
  2. total spending on domestic g+s produced
  3. total factor income earned by households
38
Q

what isn’t included in GDP?

A
  1. used goods
  2. financial assets/inputs
  3. any spending on goods not produced in nation
  4. intermediate g+s
39
Q

value added method

A

value of sales - value of intermediate g+s

40
Q

final g+s

A

g+s sold to final user

41
Q

intermediate g+s

A

g+s sold from one firm to another that are inputs for production of final g+s

42
Q

spending method

A

GDP = C + I + G + X - M

  • C = consumer spending
  • I = investment spending
  • G = government spending
  • X = exports
  • M= imports
43
Q

net exports

A

X - M

44
Q

real GDP

A
  • total value of final g + s produced in economy in given year using base year
  • takes inflation into account
45
Q

nominal GDP

A
  • total value of final g + s produced in economy in given year
  • doesn’t take inflation into account
46
Q

chained dollars

A

method of calculating changes in GDP using average between growth rate of earlier base year and later base year

47
Q

GDP per capita

A

average GDP per person

48
Q

aggregate price level

A

measure of overall level of prices in economy

49
Q

market basket

A

hypothetical set of consumer purchases of g+s

50
Q

price index

A

cost of purchasing a given market basket in a given year

51
Q

price index in a given year equation

A
52
Q

inflation rate

A

yearly percentage change in price index

53
Q

consumer price index (CPI)

A

measures the cost of market basket of a typical household

54
Q

inflation rate equation

A
55
Q

producer price index (PPI)

A

measures changes in price of g+s purchased by producers

56
Q

GDP deflator

A

Macroeconomics (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions