Term
| economic growth is measured by he inflation rate |
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Definition
| false: inflatinoin is measured by GDP |
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Term
| Aggregation is the process of putting different goods and services into a single category. |
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Definition
|
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Term
| . A curved PPF exhibits constant opportunity costs of production. |
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Definition
|
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Term
| . The study of modern macroeconomics began in response to what event in US history. |
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Definition
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Term
| Economics is the study of |
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Definition
| choice under conditions of scarcity |
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Term
| What is the difference between the fields of macroeconomics and microeconomics |
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Definition
Micro_narrow view,individual behavior,part of the total economy
micro_wide view, aggregate behavior,whole economy |
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Term
| What are the three main macroeconomic goals? VERY BRIEFLY explain why each is important |
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Definition
1.economic growth
2.Full employement
3.Stable prices(standard of living) |
|
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Term
| . When you voluntarily cook dinner for your family every Sunday night, the value of that service is included in gross domestic product (GDP). |
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Definition
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Term
| The factor payment for land is rent. |
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Definition
|
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Term
| GDP does not include an accurate measure of illegal production of goods and services. |
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Definition
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Term
| Which of the following pairs correctly matches the final user and the category they are associated with |
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Definition
| d. foreigners ~ net exports |
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Term
| Which of the following is NOT a component of private investment (I)? |
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Definition
| Which of the following is NOT a component of private investment (I)? |
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Term
Using the expenditure approach, calculate GDP for the economy detailed below.
Imports = $4 mil
Exports = $2 mil
Gov’t purchases of G/S = $3 mil
Gov’t transfer payments = $2 mil
Private investment = $5 mil
Consumption expenditures = $6 mil
Stocks & Bonds purchases = $1 mil |
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Definition
GDP:C+I+G+NX
GDP:6+5+3+(2-4).......GDP:12 million |
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Term
| The working age population is simply the sum of all employed and unemployed individuals. |
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Definition
| False:16 or older, civilian, not in institution |
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Term
| The main economic cost of unemployment is the opportunity cost of lost output. |
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Definition
|
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Term
| Capital equipment purchased by a typical (normal) business is included in the CPI market basket. |
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Definition
| False:only goods purchaased directly by consumers and households |
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Term
| Which of the following best matches the unemployed to the correct category of unemployment? |
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Definition
| c. High school graduate delays college to enter labor force ~ frictional |
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Term
| Which of the following is a problem we discussed with the measurement of unemployment? |
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Definition
| b. Part-time workers who want to be full-time |
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Term
|
Definition
| unemployed/labor force*100 |
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Term
|
Definition
|
|
Term
| labor force participation rate |
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Definition
| labor force/ working age pop.*100 |
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Term
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Definition
| cost of market basket/cast of market basket in base year*100 |
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Term
|
Definition
| % change in price level from oneperiod to the next |
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Term
| When determining an economy’s level of output, we assume that labor is the only factor that is fixed. |
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Definition
| False, labor is a variable,,,resources and technology are considered fixed |
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Term
| As the real wage increases, more people will want to work. |
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Definition
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Term
| The classical long-run model attempts to explain the observation that over long periods of time the economy performs rather well. |
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Definition
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Term
| Each individual has a critical wage rate above which they decide they are better off not working. |
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Definition
| False,each worker has a critical wage ratebelow which they decide they are better off not working. |
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Term
| Which of the following “challenged” the ideas of the classical model |
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Definition
|
|
Term
| . Say’s Law reinforces the idea that |
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Definition
a. total spending is equal to total production
b. total spending is equal to total output
c. total income is equal to total output |
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Term
|
Definition
|
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Term
|
Definition
|
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Term
|
Definition
|
|
Term
| . What is the critical assumption (regarding markets) of the classical long run model? |
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Definition
| Markets clear(prices adjust until Qs=Qd |
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Term
9. In the classical labor market,
a. Who are the suppliers of labor? b. Who are the demanders? |
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Definition
| households supply labor and firms demand labor |
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Term
|
Definition
| relationship between total employement and total production |
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Term
| When government purchases are greater than net tax revenue, the government is running a budget surplus. |
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Definition
|
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Term
| The classical view of fiscal policy is that has no demand-side effects on output. |
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Definition
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Term
| Which of the following would result in an increase in employment |
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Definition
| b. A reduction of welfare benefits. |
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Term
| If our capital stock increases, then |
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Definition
a. the aggregate production function will shift upward.
b. a given level of workers can now produce more output .
c. the average standard of living will rise. |
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Term
| Suppose the government begins to offer subsidies for education and training to increase workers’ skills. What effect will this have on each component of the labor market? |
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Definition
Ls:no effect Wealth:increases
Ld:Increases Le:increases |
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Term
|
Definition
|
|
Term
| . Calculate labor productivity if 350,000 workers can produce $70 million output. |
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Definition
| 70 million/.35 million::200 million |
|
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Term
| what are ways that government might try to increase investment? |
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Definition
| investment tax credit,decrease capital gains tax,balance budget(dec. defecit),restructive social security system, consumption tax, or cut corporate profits tax. |
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Term
| The consumption function represents the linear relationship between consumption spending and disposable income. |
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Definition
|
|
Term
| . The consumption-income line will have a higher intercept than the consumption function, but the slope will remain the same. |
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Definition
| slope will be the same with a lower intercept |
|
|
Term
| . Which of the following would result in an increase in inventories? |
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Definition
| b. When output is higher than aggregate expenditure. |
|
|
Term
| . What are the four key variables that influence consumption spending? Which has the largest impact on C? |
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Definition
| wealth,expectation,interest rate, disposable income C:D.I. |
|
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Term
| . What is the equation for aggregate expenditure? |
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Definition
|
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Term
| Move right along consumption income line |
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Definition
|
|
Term
| move left along consumption income line |
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Definition
|
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Term
|
Definition
| taxes Increase, wealth increase, interest decrease, optimistic, (a) increase |
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Term
|
Definition
| taxes in decrease, wealth decreases interest increases, pesemistic,(a)decreases |
|
|
Term
| . If one point on the graph is (80 bil, 40 bil) and a second point is (84 bil, 42 bil), what is the marginal propensity to consume (MPC)? |
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Definition
MPC/Slope:(y2-y1)/(X2-X1)
(42-40)/(84-80)::1/2 |
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Term
| What will happen to the consumption-income line, autonomous consumption spending, and MPC if taxes are raised to $12 billion? |
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Definition
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Term
| Commodity money is any good accepted as means of payment because of government declaration, but it has no intrinsic value. |
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Definition
| False: this is fiat money |
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Term
| Automatic stabilizers will cause the impact of spending changes on the economy to be less than one would expect when using the expenditure multiplier. |
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Definition
|
|
Term
| . When attempting to control the money supply (MS), the Fed cannot control the amount of money households hold as deposits. |
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Definition
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Term
| If the Fed wished to decrease the money supply using open market operations (OMO), what action would it take? |
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Definition
|
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Term
| Suppose planned investment spending (IP) falls by $3 million dollars, and the marginal propensity to consume is 0.8. How will equilibrium GDP change? |
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Definition
1/1-mpc=5
Change in eq GDP = exp. multiplier *change in investment spending
or 5*(-3)=-15 million
Equ. GDP decreases by $15 million |
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Term
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Definition
| d. are not considered money but are important because they may affect how much people hold in M1 and M2. |
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Term
| list the automatic stabalizers |
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Definition
| taxes, transfer payments, interest rates, imports, time, and forward looking bahavior |
|
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Term
| Who is the current chairman of the Board of Governors? |
|
Definition
|
|
Term
| . How many Federal Reserve Districts are there? |
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Definition
| 12 federal reserve districts |
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Term
| Which district is Milledgeville in? (What is the number of the district OR the city where the Federal Reserve Bank is located?) |
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Definition
|
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Term
| What are the three functions of money discussed in class? |
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Definition
| unit of account, store value, value , and means of payment |
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Term
| If the required reserve ratio is 5%, how much money will be “created” when demand deposits increase by $2500? (Assume that excess reserves will be zero.) |
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Definition
Money multiplier= 1/RRR
=1/.05...=20
demand increases by 2,500
so 2,500*20=$50,000 |
|
|
Term
| . List and define the 3 main policy tools of the Fed. |
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Definition
| open market operations, reserve requirements, discount rate |
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Term
| The Money Supply curve (MS) is an upward sloping curve; as the interest rate rises, the quantity supplied of money will also rise. |
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Definition
| False: Ms is a vertical curve, as interest rises the quantity of money supplied will not rise |
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Term
| The process by which the economy adjusts to the long run is referred to as a self-correcting mechanism. |
|
Definition
|
|
Term
| . When the Fed manipulates money supply in order to reach a macroeconomic goal, that is known as monetary policy. |
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Definition
|
|
Term
| When an economy is in short-run equilibrium, it will always be operating at full employment. |
|
Definition
|
|
Term
| . In the long run, real GDP |
|
Definition
| real GDP wil be =to potential GDP |
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Term
| An increase in Md can be caused by |
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Definition
| an increase in real income |
|
|
Term
| . What is the Federal Funds Rate? |
|
Definition
| interest rates charged for loans of reserves among banks |
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Term
| What factors can cause the Aggregate Supply curve to shift? |
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Definition
| change in weather, technology, world oil prices increase,adjustment to long run |
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Term
| – Show what will happen if the Federal Reserve decides to DECREASE the money supply. |
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Definition
| interest rates will go down |
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