ECON ch 5- EXAM #1 Flashcards Preview

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Flashcards in ECON ch 5- EXAM #1 Deck (37):
1

4 macro (mirco) players

1. households
2. firms
3. gov
4. rest of the world

2

3 market arenas

1. goods and services (output) market
2. labor market
3. financial- capital market

3

3 economic policy (gov.)

1. fiscal
2. monetary
3. growth

4

microeconomics examines

the behavior of individual decision-making units (firms and households)

5

macroeconomics deals with

with the economy as a whole; it examines the behavior of economic aggregates investment, and the overall price level

6

refers to the behavior of all households and firms summed together

aggregate behavior

7

3 major objectives of macroeconomics

1. output growth
2. inflation
3. unemployment

8

Y= production =

=income = GDP

9

% change in GDP formula

GDP 2013- GDP 2012/ GDP 2012 X100

10

a period during which aggregate output decreases and unemployment increases

recession

11

a prolonged and deep recession

depression

12

people who want to have a job

labor force

13

how to calculate unemployment rate

unemployed people/labor force X100

14

is an increase in the overall price level

inflation

15

is a period of very rapid increases in the overall price level

hyperinflation

16

is a decrease in the overall price level

deflation

17

microeconomics generally

conclude that markets work well; prices are flexible and allow markets to stay in equilibrium

18

are prices that do not always adjust rapidly to maintain the equilibrium in markets

sticky prices

19

refers to the gov. role in regulating the state of economy

fine-tuning

20

generally conclude that markets work well; prices are flexible and allow markets to stay in equilibrium

microeconomics

21

a period of severe economic contraction; low output and high unemployment that began in 1929 and continued thru out the 1930s

the great depression

22

failed to explain the prolonged existence of low output and high unemployment during the great depression

simple classical models

23

who believed that the gov could intervene in the economy to affect the level of output and employment

keynes

24

changes in taxes, interest rates, money supply, and gov spending in order to control inflation and unemployment

fine tuning

25

unemployment and inflation rose sharply and unexpectedly

stagflation

26

economic expansion became the longest on record at 107 months in

feb 2000

27

referes to the gov policies concerning gov taxes and spending

fiscal policy

28

consists of tools used by the federal reserve to set (control) the quantity of money in the economy

monetary policy

29

are gov policies that focus on stimulating aggregate supply instead of aggregate demand

growth policies (supply side policies)

30

the total demand for goods and services in an economy

aggregate demand

31

the total supply of goods and services in an economy

aggregate supply

32

the cycle of SR ups and downs in the economy

business cycle

33

this is the total quantity of goods and services produced in an economy in a given period for final consumption

aggregate output (measured by GDP)

34

is the period in the business cycle from a trough up to a peak, during which output and employment rate rise

expansion or boom

35

is the period in the business cycle from a peak down to a trough, during which output and employment fall

contraction, recession, or slump

36

during recession, what does GDP do and Unemployment do

GDP falls and U rises

37

during expansion, what does GDP and Unemployment do

GDP rises and U falls