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EK111 Macroeconomics > Slides > Flashcards

Slides Flashcards

1
Q

How dod the slides define potential output

A

The long term gdp trajectory that todays labor capital and technology can sustain on average

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2
Q

What does countercyclical and pro cyclical mean

A

Counter cyclical means that f.ex inflation rises when output decreases and pro cyclical means the opposite f.ex inflation rises with output

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3
Q

Okhuns law

A

Unemployment is countercyclical to growth

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4
Q

Why is gdp counted on market value

A

To include subsidies and taxes

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5
Q

What is counted as income when calculating gdp

A

Labor income and operating surplus or income to capital

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6
Q

How is the affect of the year chosen as base mittegated when calculating real gdp

A

They use a chained index aka they calculate it one year at a time

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7
Q

Is gdp a mesure of the income of a countrys residents

A

No only income eithin the borders as foreigners can accrue the capital income

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8
Q

What is gross national income gni

A

Gdp+net labor and capital income from abroad

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9
Q

What is net national income

A

GNI - replacement of depreciated capital

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10
Q

What is the NNP

A

Net national product is the same as NNI but uses gdp insted of GNI

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11
Q

What are shortcomes of gdp as a target

A

Does not mesure, happyness, welfare, home production, or equality and distribution of wealth and higher production also often means higher impact on nature

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12
Q

What is the difference between Z and Y

A

I(L) inventory investment Y=I+IL

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13
Q

Is IL, X and IM offen ignored

A

Yea

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14
Q

What is the effect on gdp if the autonomous parts increase

A

Gdp increases by more than the individual increase

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15
Q

Why is 1/(1-c1) called the multiplier

A

Becouse it multiplies the changes in the autonomous part

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16
Q

Shy dies thr multiplier effect exist in production

A

Becouse production depends on consumption which depends on production creating a spiral of growth

17
Q

What are the risks of running an over expansionary fiscal policy

A

Higher government debt and inflation

18
Q

How is the government automatically stabilizing

A

Furring bad times more transfers can be granted and during good times more can be taxed more without direct decisions made

19
Q

What is RIX

A

The riksbanks bank note system that shifts the assets liability balance between Swedish banks

20
Q

How does the riksbank control the amount overnight interest rate

A

Banks need reserves and if they have a negative balance they can lend for the repo rate or cheaper through RIX as the central bank has unlimited lending capability. Although the RIX lenders can lend at the deposit rate to the rixbank so it sets the floor on what is profitable too

21
Q

What does the IS curve repersent

A

All instances of interest rate and output where ivestments = savings & demand = output the equalibrium in the goods market

22
Q

What does the LM curve stand for

A

Not a curve and represents money supply set by central bank for chisen interest rate

23
Q

What shifts the IS curve to the right

A

Lower taxes, increased G and increased consumer confidence

24
Q

What determine the attractiveness of a bond to a buyer

A

The bonds interest rate compared to the forecasted central bank repo rate

25
Q

What is quantitative easing

A

The unconventional monetary policy of buying large amounts of bonds with printed money to increase demand when the zero lower bound is already hit

26
Q

What is the diference between CPIF and CPI

A

CPIF holds interest payments constant as the central bank controls these

27
Q

How does quantitative easing affect the risk premium

A

It decreases it as the central bank dhowa it will buy the bond if needed

28
Q

What are frictional, structural and cyclical unemployment

A

Between jobs, not being in demand and not being in demand right now

29
Q

How high is normally the collectively bargained wage increase

A

2%

30
Q

What are real wages

A

W/P

31
Q

does z affect real wages

A

No only m does

32
Q

Does output revert to potential in the medium run

A

Yes because inflation reverts to expected inflation

33
Q

Why fo policymakers have an incentive to deviate from their inflation target

A

Because this lowers unemployment, this is why the central bank needs to be independant

34
Q

What is the time inconsistency problrm

A

The governments incentive to under predict inflation

35
Q

How does supply shocks affect potential output

A

It lowers it through lower equilibrium unemployment

EK111 Macroeconomics (29 decks)

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