BEC MCQ 5.2 Flashcards Preview

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Flashcards in BEC MCQ 5.2 Deck (20):
1

Increase in price level

Is inversely related to purchasing power of money

2

when the aggregate demand shift right and in the short run supply curve shift left.

It is called as demand pull inflation and cost push inflation

3

Not consistent with full employment

cyclical- it is caused by business cycle.. A downtown in aggregrate business activity. IT results from declining GDP

4

Structural frictional seasonal unemployment

Mismatch of skills and jobs is structural-An invention which leads to industry obsolete
Time lag that individual experience between jobs is frictional
unemployment due to seasonal changes

5

cost push inflation

A input in oil costs such as sharp increase in the price of oil will cause short run aggregate supply curve to shift left and thus increase the aggregate price level causing inflation

6

Demand pull inflation

is caused by aggregate shift right

7

Recessions

create cyclical unemployment

8

Expenditure approach computing GDP

GICE-Government expenditures
Capital investment
consumption
Net exports

9

Discount rate charge by federal banks

Rate that the central banks for loans to commercial banks.

10

what is banks reserve ratio

Ratio of banks reserve to its demand deposit

11

How must Federal banks raise money

Through open market bank operations
Buying or selling securities
lowering the discount rate

12

The real interest rate is

nominal interest rate minus inflation rate

13

GDP equals

GICE- Government spending plus Investment Plus consumption minus expenditures

14

CPI is

CPI this period-cpi last period/CPI last period x 100

15

stagflation occurs

when the economy suffers recession that is characterized by falling output, raising unemployment, and raising price level

16

Inflation occurs

The rate of increase in the overall price level of the economy

17

Deflation

A continuous decline in overall price level

18

The consumer price index

measures the cost of a market basket of specific goods commonly purchased by consumers. It measures consumer buying power and is not distorted by items generally bought by industry. The CPI measures what has been paid for items not what consumers will pay for them.

19

Disposable income

is less than personal income as adjusted for personal taxes

20

The percentage change in account balances is logically

Constructed as current balance-prior period bal/prior period bal