ECON ch 5- EXAM #1

Question 1

4 macro (mirco) players

Answer 1

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

Question 2

3 market arenas

Answer 2

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

Question 3

3 economic policy (gov.)

Answer 3

1. fiscal
2. monetary
3. growth

Question 4

microeconomics examines

Answer 4

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

Question 5

macroeconomics deals with

Answer 5

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

Question 6

refers to the behavior of all households and firms summed together

Answer 6

aggregate behavior

Question 7

3 major objectives of macroeconomics

Answer 7

1. output growth
2. inflation
3. unemployment

Question 8

Y= production =

Answer 8

=income = GDP

Question 9

% change in GDP formula

Answer 9

GDP 2013- GDP 2012/ GDP 2012 X100

Question 10

a period during which aggregate output decreases and unemployment increases

Answer 10

recession

Question 11

a prolonged and deep recession

Answer 11

depression

Question 12

people who want to have a job

Answer 12

labor force

Question 13

how to calculate unemployment rate

Answer 13

unemployed people/labor force X100

Question 14

is an increase in the overall price level

Answer 14

inflation

Question 15

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

Answer 15

hyperinflation

Question 16

is a decrease in the overall price level

Answer 16

deflation

Question 17

microeconomics generally

Answer 17

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

Question 18

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

Answer 18

sticky prices

Question 19

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

Answer 19

fine-tuning

Question 20

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

Answer 20

microeconomics

Question 21

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

Answer 21

the great depression

Question 22

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

Answer 22

simple classical models

Question 23

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

Answer 23

keynes

Question 24

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

Answer 24

fine tuning

Question 25

unemployment and inflation rose sharply and unexpectedly

Answer 25

stagflation

Question 26

economic expansion became the longest on record at 107 months in

Answer 26

feb 2000

Question 27

referes to the gov policies concerning gov taxes and spending

Answer 27

fiscal policy

Question 28

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

Answer 28

monetary policy

Question 29

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

Answer 29

growth policies (supply side policies)

Question 30

the total demand for goods and services in an economy

Answer 30

aggregate demand

Question 31

the total supply of goods and services in an economy

Answer 31

aggregate supply

Question 32

the cycle of SR ups and downs in the economy

Answer 32

business cycle

Question 33

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

Answer 33

aggregate output (measured by GDP)

Question 34

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

Answer 34

expansion or boom

Question 35

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

Answer 35

contraction, recession, or slump

Question 36

during recession, what does GDP do and Unemployment do

Answer 36

GDP falls and U rises

Question 37

during expansion, what does GDP and Unemployment do

Answer 37

GDP rises and U falls