Economics Flashcards
What are factors leading to shifts in the demand curve?
Income
Price of substitute goods
Price of complement goods
Market size
Expectations of future price
Preference
What are factors leading to shifts in the supply curve?
Number of products
Government subsidy
Production cost
Expectations of future price
Price of related goods
Technological advancement
What are examples of economic theories (macroeconomics)?
Classical economics
Keynesian theory
Monetarist theory
Supply-side theory
New-Keynesian theory
What is classical economics?
Classical economics believe markets are self-regulating; advocates free market with no government intervention of any kind.
What is Keynesian theory?
Keynesian theory allows the use of fiscal policy such as increasing or decreasing taxes and government spending to regulate the economy.
What is monetarist theory?
Monetarist theory allows for the use of monetary policy such as increasing or decreasing reserve ration, discount rate, and open market operations to regulate the economy.
What is supply-side theory?
Supply-side theory believes cutting taxes stimulates work, savings, and investments and restores incentive to the economy; advocates decreased regulation and taxes.
What is New-Keynesian theory?
New-Keynesian theory is a combination of Keynesian and Monetarist economic theories; advocates using both Fiscal Policy and Monetary Policy to regulate the economy.
What is inflation?
Inflation is an increase in the general level of prices.
What are types of unemployment?
Frictional unemployment
Structural unemployment
Seasonal unemployment
Cyclical unemployment
What is frictional unemployment?
An individual will be considered “unemployed” between being laid off by employer A and learning about and being hired by employer B, even if employer B has a job opening when the individual is laid off by employer A.
Exists at full employment.
What is structural unemployment?
Due to skill gap results from technological advancement and can be reduced by training and upskilling.
Exists at full employment.
What is seasonal unemployment?
Results due to reduced requirement during certain seasons.
Exists at full employment.
What is cyclical unemployment?
Exists due to fluctuation in a business cycle.
Does not exist at full employment and is zero at full employment.
What are types of interest rates?
Risk-free real rate
Risk-free nominal rate
Risk-adjusted nominal rate
Discount rate
Prime rate
