What is the total output (GDP) demanded at different price levels by different groups
Why might the aggregate demand curve slopes down because higher prices
What are the AD curve shift factors or 'shocks'
What is monetary policy?
What is fiscal policy?
What is the total output produced at different price levels by different groups?
Aggregate supply slopes upwards (short run)
Aggregate supply slopes vertical (long run)
What can shock the LRAS curve?
Economics is the study of how society allocates its plentiful resources
Economic growth causes a production possibilities frontier to shift upwards or outward to the right
If a country can make more of a product per hour than another, then they cannot gain from trading with the other country.
Consumer surplus measures the benefit to buyers from participating in a market
A legal minimum on the price of a good is a price ceiling
Prices controls are inefficient because they result in lost gains from trade
What is the limited nature of society's resources?
What is incentive?
What is opportunity cost?
What is efficiency?
| Draggable item | arrow_right_alt | Corresponding Item |
|---|---|---|
What is a graph that shows the combinations of output that the economy can possibly produce given the available resources and technology? | arrow_right_alt | Circular-flow diagram |
What is a visual model of the economy that shows how dollars flow through markets among households and firms? | arrow_right_alt | Production possibilities frontier (PPI) |
What does the PPI illustrate?
What is the ability to produce a good using fewer inputs than another producer does
What is the ability to produce a good at a lower opportunity cost than another producer
Gains from trade are based on comparative advantage or absolute?
What is the principle of comparative advantage?
What is a market in which there are so many buyers and so many sellers that each has a negligible impact on the market
A graph that shows how the quantity of a good demanded depends on the price is the demand curve
The amount of good that buyers are willing and able to purchase is called the quantity demanded
Other things equal, as the price of the good falls the quantity demanded rises and vice versa (curve slopes downward) is the Law of demand
Which way does a demand curve increase on a graph?
Which way does a demand curve decrease on a graph
What are the determinants of demand?
The supply curve shows how the quantity of a good supplied depends on the price.
The amount of a good that producers are willing and able to sell is the quantity supplied
As the price of a good falls, the quantity supplied falls and vice versa. (curve slopes upwards) is known as?
What are the determinants of supply?
What is the intersection of supply and demand curves called?
When the market price is above the equilibrium price is?
When the market price is below the equilibrium price is know as?
What three steps are used to analyze how any event influences a market
The maximum amount that a buyer will pay for a good is known as? (Consumer)
What equals buyers willingness to pay for a good minus the amount they actually pay? (Consumer)
How can consumer surplus be computed?
The minimum amount that a seller will accept for their goods (producer)
What equals the amount sellers receive for their goods minus their willingness to accept
How can producer surplus be computed?
What is the allocation of resources that maximizes a total surplus (sum of consumer and producer)
A legal maximum on the price at which a good can be sold is?
If the price ceiling is below the equilibrium price is it binding?
A legal minimum on the price at which a good can be sold is?
If the price floor is above the equilibrium price is the price floor binding?
Price controls on goods reduce the welfare of buyers and sellers of the goods
Price controls have deadweight losses because they decrease the quantity traded and shrink the size of the market below the level that maximizes total surplus
The market value of all final goods/ services produced within a country in a given period of time
Market value of all final goods/ services produced by U.S residents no matter where they live
What does GDP per capita measure?
GDP growth measures the direction of an economy
GDP is a perfect measurement of the average persons standard of living
What is nominal GDP
What is real GDP
What does GDP deflator measure?
How can an economys inflation rate be measured?
A country's standard of living depends on its ability to produce good and services
What are the determinants of productivity?
What public policies encourage economic growth?
a economy's rate of productivity growth is closely linked to the growth rate of GDP per capita
inflation is the avg change in prices or in the price level (some prices go up while others go down)
What are the different price indexes used to measure inflation?
What can be calculated by fixing the basket, finding the prices, compute the baskets cost, and choose a base year and compute the index?
Substitution bias, introduction of new goods, and unmeasured quality change, are some of the problems with CPI
What is included in CPI but excluded from GDP Deflator?
What is included in GDP deflator but excluded from CPI
CPI uses fixed basket while GDP Deflator uses basket of currently produced goods and services
real interest rate is corrected for inflation but nominal is not
What is the unemployment rate of a labor force?
the % of the adult non institutionalized civilian population either working or looking for work is?
the unemployment rate measures the 'hidden unemployment (underemployment, part-time, discouraged workers)
What are the three types of unemployment?
A student who just graduated from college but hasn't found a job yet is considered to be
a freightliner employee that got laid off because of the recession of 2007-2009 is considered
People who lost their jobs as hand-drawn animators because of the popularity of computer generated 3D animation are considered
What is the normal rate of unemployment around which the actually unemployment rate fluctuates
What are three public policies to address unemployment
Aggregate supply slopes which way in the long run?
What does LRAS stand for?
What does SRAS stand for?
countries specialize based on absolute advantage
economic growth means that a country can produce more of all the goods
as income goes up people buy more of an inferior good, therefore increasing its demand
a binding price floor causes a surplus and is inefficient
What can cause shifts in the AD, SRAS, and LRAS
| Draggable item | arrow_right_alt | Corresponding Item |
|---|---|---|
Changes in natural resources | arrow_right_alt | AD |
Expectations about prices or inflation | arrow_right_alt | AD |
Nominal wages | arrow_right_alt | SRAS |
Consumption/ investment | arrow_right_alt | SRAS |
Capital/ labor/ technological changes | arrow_right_alt | SRAS |
Productivity/ input prices | arrow_right_alt | LRAS |
Gov't spending/ net exports | arrow_right_alt | LRAS |
What is any asset that people are generally willing to accept in exchange for goods and services
the existence of money makes trading much easier and allows specialization
without money you would have to barter
Money is acceptable to a wide variety of parties as a form of payment for goods and services
Money is the yardstick people use to post prices and record debts
Money allows people to defer consumption till a later date by storing value
The two different types of money are; Commodity and fiat money
The form of a commodity with intrinsic value. Ex; gold coins, cigarettes in POW camps
Money without intrinsic value, used a money because of gov't decree
the quantity of money available in the economy is called the money supply
Paper bills and coins in the hands of the public is known as
Balances in bank accounts that depositors can access on demand is
What are the three categories of money supply in the US?
Currency and reserves at the central bank (federal reserve) is?
Banks are only required to hold only a portion of the money deposited with them as reserves is?
What is the reserve ratio
What is money multiplier?
What is the difference between M1 and M2
| Draggable item | arrow_right_alt | Corresponding Item |
|---|---|---|
M1 + other savings deposits | arrow_right_alt | M1 |
MB + checking and savings accounts | arrow_right_alt | M2 |
when banks gain reserves, they make new loans, and the money supply expands
An institution that oversees the banking system and regulates the money supply
The central bank of the US is known as?
The setting of the money supply by policymakers in the central bank.
What does the central bank of the US include?
the Fed maintains the bank account of the US treasury and manages govt borrowing
Large private banks do not keep accounts at the Fed, nor can they borrow from the Fed
The Fed controls the money supply, keeps inflation/ unemployment low and stable, and encourages growth
What policy tool can the Fed use to change the money supply?
The amount that banks must hold when they receive a deposit is reserve requirements
Higher tax rates for higher incomes
Constant tax rate
Lower tax rates on higher incomes
the additional shifts in AD that result when fiscal policy increases income and thereby increases consumer spending
Fiscal policy has another effect on AD that works in the opposite direction
The setting of the level of government spending and taxation by policymakers
An increase in G and/or decrease in T, shifts AD right
An decrease in G and/or increase in T, shifts AD left
changes in fiscal policy that stimulate aggregate demand when economy goes into recession, without policymakers having to take any deliberate action
In recession, taxes fall automatically, which stimulates aggregate demand
In recession, less people apply for public assistance (welfare, unemployment insurance)