Econ Final exam - Emi lamb | Library

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What is the total output (GDP) demanded at different price levels by different groups

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Why might the aggregate demand curve slopes down because higher prices

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What are the AD curve shift factors or 'shocks'

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What is monetary policy?

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What is fiscal policy?

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What is the total output produced at different price levels by different groups?

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Aggregate supply slopes upwards (short run)

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Aggregate supply slopes vertical (long run)

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What can shock the LRAS curve?

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Economics is the study of how society allocates its plentiful resources

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Economic growth causes a production possibilities frontier to shift upwards or outward to the right

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If a country can make more of a product per hour than another, then they cannot gain from trading with the other country.

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Consumer surplus measures the benefit to buyers from participating in a market

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A legal minimum on the price of a good is a price ceiling

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Prices controls are inefficient because they result in lost gains from trade

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What is the limited nature of society's resources?

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What is incentive?

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What is opportunity cost?

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What is efficiency?

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What does the PPI illustrate?

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What is the ability to produce a good using fewer inputs than another producer does

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What is the ability to produce a good at a lower opportunity cost than another producer

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Gains from trade are based on comparative advantage or absolute?

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What is the principle of comparative advantage?

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What is a market in which there are so many buyers and so many sellers that each has a negligible impact on the market

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A graph that shows how the quantity of a good demanded depends on the price is the demand curve

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The amount of good that buyers are willing and able to purchase is called the quantity demanded

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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

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Which way does a demand curve increase on a graph?

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Which way does a demand curve decrease on a graph

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What are the determinants of demand?

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The supply curve shows how the quantity of a good supplied depends on the price.

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The amount of a good that producers are willing and able to sell is the quantity supplied

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As the price of a good falls, the quantity supplied falls and vice versa. (curve slopes upwards) is known as?

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What are the determinants of supply?

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What is the intersection of supply and demand curves called?

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When the market price is above the equilibrium price is?

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When the market price is below the equilibrium price is know as?

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What three steps are used to analyze how any event influences a market

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The maximum amount that a buyer will pay for a good is known as? (Consumer)

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What equals buyers willingness to pay for a good minus the amount they actually pay? (Consumer)

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How can consumer surplus be computed?

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The minimum amount that a seller will accept for their goods (producer)

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What equals the amount sellers receive for their goods minus their willingness to accept

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How can producer surplus be computed?

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What is the allocation of resources that maximizes a total surplus (sum of consumer and producer)

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A legal maximum on the price at which a good can be sold is?

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If the price ceiling is below the equilibrium price is it binding?

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A legal minimum on the price at which a good can be sold is?

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If the price floor is above the equilibrium price is the price floor binding?

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Price controls on goods reduce the welfare of buyers and sellers of the goods

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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

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The market value of all final goods/ services produced within a country in a given period of time

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Market value of all final goods/ services produced by U.S residents no matter where they live

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What does GDP per capita measure?

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GDP growth measures the direction of an economy

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GDP is a perfect measurement of the average persons standard of living

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What is nominal GDP

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What is real GDP

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What does GDP deflator measure?

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How can an economys inflation rate be measured?

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A country's standard of living depends on its ability to produce good and services

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What are the determinants of productivity?

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What public policies encourage economic growth?

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a economy's rate of productivity growth is closely linked to the growth rate of GDP per capita

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inflation is the avg change in prices or in the price level (some prices go up while others go down)

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What are the different price indexes used to measure inflation?

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What can be calculated by fixing the basket, finding the prices, compute the baskets cost, and choose a base year and compute the index?

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Substitution bias, introduction of new goods, and unmeasured quality change, are some of the problems with CPI

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What is included in CPI but excluded from GDP Deflator?

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What is included in GDP deflator but excluded from CPI

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CPI uses fixed basket while GDP Deflator uses basket of currently produced goods and services

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real interest rate is corrected for inflation but nominal is not

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What is the unemployment rate of a labor force?

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the % of the adult non institutionalized civilian population either working or looking for work is?

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the unemployment rate measures the 'hidden unemployment (underemployment, part-time, discouraged workers)

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What are the three types of unemployment?

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A student who just graduated from college but hasn't found a job yet is considered to be

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a freightliner employee that got laid off because of the recession of 2007-2009 is considered

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People who lost their jobs as hand-drawn animators because of the popularity of computer generated 3D animation are considered

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What is the normal rate of unemployment around which the actually unemployment rate fluctuates

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What are three public policies to address unemployment

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Aggregate supply slopes which way in the long run?

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What does LRAS stand for?

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What does SRAS stand for?

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countries specialize based on absolute advantage

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economic growth means that a country can produce more of all the goods

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as income goes up people buy more of an inferior good, therefore increasing its demand

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a binding price floor causes a surplus and is inefficient

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What can cause shifts in the AD, SRAS, and LRAS

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What is any asset that people are generally willing to accept in exchange for goods and services

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the existence of money makes trading much easier and allows specialization

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without money you would have to barter

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Money is acceptable to a wide variety of parties as a form of payment for goods and services

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Money is the yardstick people use to post prices and record debts

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Money allows people to defer consumption till a later date by storing value

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The two different types of money are; Commodity and fiat money

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The form of a commodity with intrinsic value. Ex; gold coins, cigarettes in POW camps

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Money without intrinsic value, used a money because of gov't decree

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the quantity of money available in the economy is called the money supply

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Paper bills and coins in the hands of the public is known as

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Balances in bank accounts that depositors can access on demand is

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What are the three categories of money supply in the US?

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Currency and reserves at the central bank (federal reserve) is?

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Banks are only required to hold only a portion of the money deposited with them as reserves is?

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What is the reserve ratio

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What is money multiplier?

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What is the difference between M1 and M2

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when banks gain reserves, they make new loans, and the money supply expands

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An institution that oversees the banking system and regulates the money supply

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The central bank of the US is known as?

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The setting of the money supply by policymakers in the central bank.

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What does the central bank of the US include?

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the Fed maintains the bank account of the US treasury and manages govt borrowing

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Large private banks do not keep accounts at the Fed, nor can they borrow from the Fed

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The Fed controls the money supply, keeps inflation/ unemployment low and stable, and encourages growth

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What policy tool can the Fed use to change the money supply?

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The amount that banks must hold when they receive a deposit is reserve requirements

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Higher tax rates for higher incomes

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Constant tax rate

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Lower tax rates on higher incomes

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the additional shifts in AD that result when fiscal policy increases income and thereby increases consumer spending

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Fiscal policy has another effect on AD that works in the opposite direction

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The setting of the level of government spending and taxation by policymakers

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An increase in G and/or decrease in T, shifts AD right

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An decrease in G and/or increase in T, shifts AD left

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changes in fiscal policy that stimulate aggregate demand when economy goes into recession, without policymakers having to take any deliberate action

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In recession, taxes fall automatically, which stimulates aggregate demand

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