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CFA Level 1 > Economics > Flashcards

Economics Flashcards

1
Q

Is a measurement of the responsiveness of a quantity demanded to change in price

A

Own-price elasticity

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2
Q

the sensitivity of quantity demanded to a change in income.

%change in Quantity demanded/%change in income

A

Income elasticity

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3
Q

Goods that that have a positive income elasticity . from an increase in income.

A

Normal Goods

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4
Q

An increases in income that leads to a decrease in Quaintly demanded.

A

Inferior Goods

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5
Q

the % change in the quantity demanded of a good to the % change in the price of a related good

A

Cross-Price Elasticity of Demand

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6
Q

An increase in price of a related good decreases demand for another good

A

Complements

eg: increase in car price leads to decrease in gas demand

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7
Q

When a price in a good decreases shifts spending towards more of this good

A

Substitution Effect

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8
Q

when the price of a good falls this and allows the consumer to use there money better else where

A

Income Effect

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9
Q

An inferior good for which the negative income effect outweighs the positive substitution effect when price falls

A

Giffen Good

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10
Q

A higher price makes the good more desirable

A

Veblen Good

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11
Q

What are the 4 factors of production

A

Land, Labor, Capital and Materials

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12
Q

when only considering the only two inputs as capital and labor

A

Production Function

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13
Q

when the quantity of labor for which the additional output for each additional worker begins to decline

A

Diminishing marginal productivity/Diminishing marginal returns

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14
Q

Firms that produce identical products, have low barriers to entry, many firms, and compete based off of price

A

Perfect Competition

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15
Q

Firms that produce products that differentiate from each other, have low barriers to entry, have good substitutes but are slightly different, compete using price marketing and product features

A

Monopolistic Competition

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16
Q

Few firms, high barrier to enter, very good subs but are differentiated, compete using price marketing and features, have some significant pricing power

A

Oligopoly

17
Q

single frim that has very high barriers to enter. No good subs and compete using advertising. Has significant level of price power

A

Monopoly

18
Q

Price is Greater than Cost. this difference is called?

A

Markup

19
Q

The Practice of chagrging Different consumers different prices for the same product or service

A

Price Discrimination

20
Q

The total market value of the goods and services produced in a country within a certain time period.

A

Gross Domestic Product (GDP)

21
Q

what is the approach used to calculating GDP by summing the amounts spent on goods and services produced during the period

A

Expenditure approach

22
Q

the calculation used for GDP by Summing the amounts earned by households and companies during the period

A

Income Approach

23
Q

income received by all factors of production used in the creation of final output

A

National Income

24
Q

pretax income received by households.

A

Personal income

25
Q

income that is received after taxes

A

Household Disposable

26
Q

Name all of the Business Cycles

A

Contraction(recession), Expansion peak, trough

27
Q

Cyclical fluctuations in interest rates and the availability of loans

A

Credit Cycles

28
Q

What are some Leading Indicators?

A

Weekly hours in Manufacturing, initial Claims for Unemployment insurance, Manufacturers new orders of goods, New orders for non-defense capital goods, New Orders index, Building permits, Stock Prices, Yield Curve, Leading credit Index, Consumer expectations

29
Q

What are some Coincident Indicators?

A

Employees (non farm payrolls), Personal Income(less transfer payments), Industrial production, Manufacturing and trade Sales

30
Q

What are some Lagging Indicators

A

Duration of unemployment*, Prime Rate, Consumer Price Index, Commercial industrial Loans, Consumer Credit/Personal income ratio

31
Q

type of unemployment from the time it takes employers and employees to find each other

A

Frictional unemployment

32
Q

type of unemployment that the longer-term economic changes where workers must gain new skills/training

A

Structural Unemployment

33
Q

type of unemployment that results from changes in economic growth, this equals to zero at full unemployment

A

Cyclical Unemployment

34
Q

What is the CPI equation?

A

CPI = (Cost of Basket at current price/Cost of basket at base period price) * 100

35
Q

Increases in wages or other producer input prices decreases short-run aggregate supply, increase price level

A

Cost- Push Inflation

36
Q

Increase in aggregate demand above full employment inscreses price level

A

Demand- Pull Inflation

CFA Level 1 (2 decks)

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